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The only way to lower your 


Who really owns PG&E? 


Diablo Canyon 


electric rates 


THE HISTORY OF THE $44 MILLION A YEAR PG&E/CITY HALLJRAKER ACT SCANDAL 

RATING THE RATES: PG&E VS. 11 PUBLIC POWER CmES IN CAUFORNiA 

PROP. K: THE CASE FOR A FEASIBILITY STUDY TO MUNICIPALIZE PG&E 














jk THE SAN FRANCiSCO BAY GUARDIAN, OCTOBER6, 1 982 



setter. Freelance typesetter 
& writer Published in Cats , 
New Age & Wadsworth 
Gazette, Berkeley. 

BEVERLY NAUMAN: Display 
Ad Sales Rep. National ad 
Acct. Exec, for Chronicle/ 
Examiner 

LINDA NELSON: Classified 
Ad Sales Rep. Owns altera* 
tions business, Berkeley. 
GLORIA OCKENFELS: Dis¬ 
play Ad Sales Rep, Studying 
for BA at U. of Penn,, Phila¬ 
delphia. 

LANE OLSON: Classified Ad 
Sales Rep. Graphic artist 
with E lephant G raphics, SF. 
CHARLI ORNETT: Senior 
Designer Design Associate 
for Runner's Wortd and Fit 
magazines. Member of Plum 
Design Collective, SF. 
GEORGIA OTTERSON: Dls* 
tributton Mgr Events co¬ 
ordinator for Bread & Roses, 
lives in Marin. 

CAROL PLADSEN: Display 
Ad Sales Rep. Associate 
Publisher at Nolo Press, 
Berkeley. 

SHYRL PONDER: Distribu¬ 
tion Mgr Publicity Coordinator 
at Theatre on the Square, 
SF. 

JENNIFER POOLE: Calendar 
Writer. Typing & editing ser¬ 
vice for film & play scripts, SF. 
LOIS RAB1NOWIT2: Display 
Ad Sales Rep, Mother of baby 
girl Proprietor of Arllne Pro¬ 
motions’advertising special* 
ties, Los Angeles, 

SANDY REEVES: Display 
Ad Sales Rep. Ad Sales, 
Rohnert Park*CotatI Clarion. 
DUFF REITER: Production 
Mgr Asst. Planning Mgr. of 
Merchandising for MervyfTs 
dept, store. 

PAM RHODES: Display Ad 
Sales Rep. Product Mgr,, 
Atari, Sunnyvale. 

JULIE CLEROU RtEGEL: Dis¬ 
play Ad Sales Rep. Managing 
Director of Atari Publications, 
Sunnyvale. 

MARCELO RODRIGUEZ: Re¬ 
porter. Co-writer of book on 
Yerba Buena Center, member 
of nat. exec. bd. of organizing 
committee for Nat. Writers 
Union, contributing writer to 
SF magazine. 

KATHf ROISEN: Display Ad 


Sales Rep. Media Planner, J. 
WalterThompson, SF. 
VINCENT ROMANIELLO: Ad¬ 
vertising Designer. Art Director 
of Metro magazine, SF. 

KATHY SALAMON; Editorial 
Asst. Legal Secretary, SF. 
HARRIET SALLEY: Proof¬ 
reader & Writer. Teacher 
living outside of Taos, NM. 
CRAIG SCOTT: Credit Mgr. 
Account Exec, in London ad 
agency. 

BARBARA SHAW: Distribu¬ 
tion Mgr, Asst. Media Planner 
at J. WalterThom pson T SF, 
MERRILL SHINDLER: Writer/ 
Critic. Radio writer (American 
Top 40) and TV writer (Por¬ 
trait of a Legend). Also LA 
Magazine film critic, music 
reviewer for King Features 
and LA Herald Examiner 
restaurant reviewer. 

RENEE SIMI: Advertising 
Coordinator, Marketing Di¬ 
rector Berkeley Repertory 
Theatre. 

DENNY SMITHSON: Distribu¬ 
tion. KPFA talk show host 
and works at Cody's Books, 
Berkeley. 

JENEPHER STOWELL: Dis¬ 
play Ad Saies Rep. Artist. 
Printing paper consultant at 
Blake, Moffitt & T owne, SF. 
DAVID SWEET: Office Assis¬ 
tant Editorial Staff of Indian 
Historical Press, Co-leader 
Amnesty I nf L g rou p T S F. 
LINDA J. SZYNISZEWSKI: 
Production Mgr./Advertising 
Mgr. Owner of Elephant Graph¬ 
ics, SF. 

SUSAN THOMPSON: Senior 
Designer Design Exec, on 
computer accts. with Reliable 
Inc., Graphic Communica¬ 
tions. SF. 

JOE VOYLES: Advertising 
Director. National Sales Mgr. 
for Twin Cities Reader. Min¬ 
neapolis and Midwest Mgr. 
of New National Rep firm for 
Assoc, of Alternative News- 
weeklies. 

MICHELLE WARDEN: Cashier/ 
Credit Mgr. Accountant for 
planning & engineering firm, 
psychology student at SF 
State. 

ART WELLER: Artist, Ad 
designer for BAM magazine, 
SF. 

CARMA WINFREY: Subscrip¬ 
tion Mgr. Technical Field 
Support Rep. for computer 
firm in Palo Alto. 


Asst. Mng, Editor of Scene 
magazine, SF. 

MARINA HIRSCH: Associate 
Editor, Freelance writer, 
Berkeley. 

DON HUGHES: Classified Ad 
Mgr. Disc jockey with Oregon 
radio station. 

TRACEY HUGHES: Office 
Assistant. Living in London. 
DAVID JOHNSTON: Reporter. 
Reporter, SF Examiner. 
KAREN KARTEN: Classified 
Ad Sales Rep. Administrator- 
Technicat Support for ITR 
computer firm, SF. 


Where are they 
now? 


GARY KAMIYA: Courier. Phi 
Beta Kappa graduate student 
in English at UC Berkeley, 
MICHAEL KETCHNER: Edi¬ 
torial 1 ntern. Assoc. Editor of 
Silver & Gold Report, an 
economic newsletter, SF. 

JO LIANA KING: Production 
Mgr. Mgr./owner Franciscan 
Systems & Graphics, a type¬ 
setting shop.SF. 

DEBORAH KLEIN: Distribu¬ 
tion Mgr. Owner of Klein's 
Deli in SF and Heartwood Inn 
on the Russian River. 

TOM LEA: Marketing Director. 
Annual reports and adver¬ 
tising photography, SF, 
ARIELLE LEONARD: Display 
Ad Sales Rep. Public relations 
account exec., Berkeley. 
MAUREEN LETTON: Ad Secy. 
Secy, at J. Waiter Thomp¬ 
son, Graphics student at UC 
Berkeley, 

CAROLYN LEVITT: Book¬ 
keeper. Mother of Benny, 4. 
and Noah, 4 mos, T Manchester, 
MO. 

ED MABRY: Credit Mgr, Sales 
Admin. Clerk at Dolby Labs. 
SF. 

FIONA MACKENZIE: Classi¬ 
fied Ad Sales Rep. Expecting 
2nd baby inMov.,SF, 

ANNE MASON: Display Ad 
Assistant. Married and living 
in England. 

KEVIN McCHESNEY: Credit 
Mgr. Accounting Clerk, Son¬ 
oma Valley Hospital. 

EILEEN MURRAY: Recep¬ 
tionist, Program information 
desk of the Central YMCA, 
SF. 

PATRICK MILLER: Type¬ 


I n last year's 15th anniversary issue of the Bay 
Guardian, we listed 104 editorial and art 
department ex-staffers, plus some former 
staff members from other departments who 
have continued to work in media. This year 
we are including ex-staffers from the advertising, 
circulation and general office departments, as 
weil as updating and catching some omissions 
from last year. After each name we have listed 
the former Guardian position, then the current 
occupation of each ex-staffer. We plan to do this 
listing every year in our October anniversary issue 
and we urge all ex-staffers to drop us a note in 
late summer or early fall to let us know what 
they're doing. 


School of Journalism, U, of 
Missouri. 

SUSAN FERRELL: Associate 
Editor, Law school student, 
U of Arizona, Tucson, 
BARBARA FREEMAN: Dis¬ 
play Ad Sales Rep. Ph.D. 
cand idate at UC Santa Cruz. 
KATI FREW: Editorial Asst. 
Archrtectu rai Secy., SF. 


(fop to bottom:) 


Jenepher S to well leads 
Guardian contingent, 
Columbus Day parade, 
1974. 


Guardian staff on Twin 
Peaks, December 1974. 


Managing Editor Mike 
Miller & Investigative 
Reporter David 
Johnston, 1979. 


PAT AGUILERA: Bookkeeper 
Accountant & MBA student 
atCaiState Hayward, 

ALAN BARRENT1NE: Clas¬ 
sified Ad Safes Rep. Fore¬ 
man at printing plant, Rich¬ 
mond. 

SAN DEE BASS: Display Ad 
Sales Rep, Lives in Maui, 
Hawaii. 

DONNABERGER: Display Ad 
Sales Rep. Sales Rep for 
UlsterScientific.SF. 

MARK BEST: Promotion. Real 
Estate Salesman for Colonial 
Realty. 

KERRIGAN BLACK: Enter¬ 
tainment Writer. Professional 
pianist & singer Creator & 
owner of “For a Song," a song¬ 
writing service. 

BETH BODENSTEIN: Display 
Ad Safes Rep. Second-year law 
student at U. of Miami. 

KATE BRISLIN: Bookkeeper 
Plays banjo with Blue Flame 
String Band. Just released 
bluegrass record on Flying 
Fish label, SF. 

ANNE BRUNN: Artist. Art 
Director, Estee Lauder, NYC. 
DAVID BURN OR: Classified 
Ad Sales Rep. Subscriptions 
Mgr of Co-Evolution Quar¬ 
terly, Sausaiilo. 

PETER CARROLL: Book Edi¬ 
tor, Author of “ItSeemed Like 
Nothing Happened: The 
Tragedy & Promise of America 
in the 1970V 1 a book sched¬ 
uled for publication by Holt t 
Rinehart & Winston in Oct, 
CANDACE CLOUD: Editorial 
Asst. Admin. Asst, for Sierra 
Club Legal Defense Fund, 
SF. 

ANDREA E. COAR: Type¬ 
setter. Proofreader/Type Co¬ 
ordinator for Scientific Amer¬ 
ican i, Pittsburgh. 

CANDACE COAR: Proofread¬ 
er. Typesetter for Turnarou nd 
Graphics, SF, 

SUSAN COOMES: Recep¬ 
tionist, Sells plants at Magic 
Gardens Nursery, Berkeley. 

BREDA COURTNEY: Asst, to 


the Publisher. Pres, of Mods, 
a service bureau for physi¬ 
cians, Union City. 

PAT DAVIS: Display Ad Sales 
Rep. Teacher, SF City College. 
NANCY DESTEFANIS: Display 
Ad Sales Rep, Lawyer in pri¬ 
vate practice near SF City 
Hall, 

ELOISE WOLFF DELUCCHI: 

Display Ad Sales Rep. Mother 
of 4-yr.-old Daniel, Pacifica. 
PATRICK DOUGLAS: City 
Editor. Freelance writer. SF. 
JANNIE DRESSER: Asst, to 
the Publisher. Heads Media 


Campaign for Nuclear Weap¬ 
ons Freeze Campaign. Oak¬ 
land. 

JOAN DRUMMOND: Pro¬ 
duction Mgr, Proprietor of 
mail-order food business, 
student at Katy Gibbs Sec¬ 
retarial School, Newbury- 
port, Mass. 

KIM DUNSTER: Production 
Mgr, Pre-med student, SF 
State. 

MICHAEL ELINSON: Display 
Ad Sales Rep, Senior in Psy¬ 
chotherapy, SF State. 

PETE ENGARDIO: Production 
Asst. Student at Graduate 


BARBARA GARZA: Artist/ 
Production Mgr. Freelance 
graphic artist, mother of 
Ellen, 4, and Kerry, 2, Santa 
Rosa. 

A. G* GERMANO: Display 
Ad Sales Rep. District Mgr. of 
Computer Decisions Mag¬ 
azine, San Bruno. 

BETSY GLECKLER: Listings 
Writer. Design & Art Produc* 
tion at Runner's Wortd maga¬ 
zine. Member of Plum Design 
Collective. 

LINDA HANGER: Distribu¬ 
tion Mgr. Admin. Asst. Saies 
Marketing at Osborne Mc¬ 
Graw-Hill, Berkeley. 

BETTY HEY: Listings Writer. 


5 free issues with each 20 week 
home-delivered subscription. 

rj 

Mai! this coupon to the Guardian with $10. 

For quicker service, call 824-7660 to 
subscribe by phone. 

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Bay Guardian Vj 

2700 19th St., San Francisco, CA.94110-2189. 

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THE BAY GUARDIAN VS. PG&E — THE 16 YEARS’ WAR 



The Bay Guardian vs. PG&E 
the 16 years’ war 


W ith this issue, the Bay Guardian 
celebrates its 16th year of pub¬ 
lishing, Sixteen years! When 
the Guardian began publishing 
in 1966, the Transamerica tower didn’t spike 
upwards from the Financial District skyline. 
There were houses, hotels and viable small 
businesses where the Yerba Buena Center 
wasteland and the Moscone Center now 
stand. There were kids zipping down the long 
slide on gunny sacks at Playland-on-the- 
Beach and elderly Filipinos living proudly in 
the International Hotel where now there are 
big, gaping holes in the ground. Artists were 
living peacefully in the Goodman Building. 
People were working downtown before the 
blizzard of highrises and the ever increasing 
hassles of Manhattanization. 

In the Guardian's more than a decade and a half, we 
have seen more than 50 publications come, many with 
ambitious fanfares and showers of money, and later 
quietly go. We have seen editors and publishers and 
news directors and station managers come and go, giv¬ 
ing the Guardian founders. Editor and-Publisher Bruce 
B, Brugmann and Associate Publisher and Business 
Manager Jean Dibble, virtually the longest and most 
continuous tenure in San Francisco media. 

Fashions have changed. Lifestyles have changed. The 
very language itself has changed. But there have been 
constants as well and the bound volumes of the Bay 
Guardian are a chronicle of the significant issues—Viet¬ 
nam, PG&E, nuclear power, Manhattamzation, the 
fight to save the world's greatest city—that have faced 
San Francisco, the Bay Area and in microcosm the 
nation over the past 16 years. 

In celebration of our anniversary, in recognition that 
the battles we have fought are still far from won, in the 
spirit of our first motto which sdll remains above the 
staff masthead, "it's the duty of a newspaper to print the 
news and raise hell*” the Bay Guardian is devoting this 
commemorative issue to one of our most famous theme 
stories, the PG&E/City Hall/Raker Act scandal. 

For 70 years, San Franciscans have been the target of 
one of the biggest and most costly ongoing scandals in 
U.S* history. 

Acting directly contrary to the expressed will of the 
citizens and in defiance of the LLS. Congress, the fed¬ 
eral Raker Act of 1912, the San Francisco city charter 
of 1932 and the U.S. Supreme Court mandate of 1940, 
city officials and the Pacific Gas & Electric Company 
have colluded for generations to keep San Francisco 
from getting its own cheap Hetch Hetchy power and in¬ 
stead to force the city’s residential and commercial rate¬ 
payers to buy PG&E's ever more expensive private 
power. 

It is a scandal unprecedented in American history, 
because Congress had never before and has never again 
granted a concession for a city (San Francisco) to build 
a dam in a beautiful valley (Hetch Hetchy) in a beau¬ 
tiful national park (Yosemite). The annual loss to the 
city is $48 million (the amount PG&E yanks out in 
profit). And the aggregate loss to the city over the past 
70 years is billions of dollars—billions lost in cheap 
electric rates, lower taxes, general fund subsidies and 
the other benefits of public power. 


And billions that went instead to the stockholders of 
PG&E, which are largely out-of-state banks, insurance 
companies and financial concerns, not people who live 
and work in San Francisco. 

Put simply, every time you flip a light switch or turn 
on the radio in San Francisco, you are overpaying on 
electricity. You are a helpless victim of the PG&E/City 
Hall/Raker Act scandal, right now, in October of 1982, 
and PG&E/City Hall and their downtown business 
allies and their media support (notably the Exam¬ 
iner/Chronicle) want to keep you that way for 
evermore. They are willing to spend what it takes, 
and use whatever power is necessary, to get the job 
done. 

That's one reason we believe we’ve proven in the past 
16 years why an independent alternative newspaper like 
the Guardian is essential for San Francisco. While the 
Examiner/Chronicle have supported their fellow power 
monopoly and their fellow Chamber of Commerce 
heavy in the name of “objective” journalism, the 
Guardian has taken on the story and fought to enforce 
the Raker Act, kick PG&E out of City Hall, restore 
some law and order in the territory and bring our own 
cheap Hetch Hetchy power home to our people. 

Joe Neilands, a veteran in the battle against PG&E 5 s 
move to jam a nuclear plant on Bodega Bay, got a bead 
on PG&E power and put together our original bomb¬ 
shell story in 1969. Then Pete Petrakis rolled up his 
sleeves as our utilities editor and tracked PG&E in story 
after story until he left for Washington, D.C., in 1975. 
Managing Editor Mike Miller added his wickedly hu¬ 
morous touches during the late 1970s. Investigative Re¬ 
porter David Johnston rolled up a spectacular series of 
investigations on Sup. “Fighting Bob” Mendelsohn, 
PG&E's man in City Hall and Interior, that ultimately 
torpedoed Mendelsohn's presidential nomination as the 
No. 2 man in Interior. (See the chronology, 1977-80.) 
Editor Bruce B. Brugmann kept throwing the logs on 
theeditorial fires. 

Today, a new task force, noted in the adjoining box, 
was at work to bring you the damning indictment in this 
edition. 

We looked upon the PG&E/City Hall story as a key 
political and journalistic litmus test issue and as a way 
to make the city's invisible government visible and put 
the pressure on. It not only helped disclose for us who 
was selling out to whom and for what and how fast, but 
it demonstrated that the people helping PG&E/City 
Hall perpetuate the Raker Act scandal are the same 
people and the same structure of political power 
that tilts City HaU toward the Bank of America/Wclls 
Fargo/Crocker towers downtown and away from the 
neighborhoods. They're the same people who are 
wrecking the city with pellmeU Manhattanization and 
forcing the residents to subsidize the costs with high 
rents. Impossible housing prices, deteriorating city serv¬ 
ices and ever-increasing taxes. Muni fares and service 
fees. 

In short, we believe the more the Guardian can make 
the invisible government visible and keep the pressure 
on, the better the chance to stop the Raker Act scandals 
and highrise booms and the other from-the-top-of-the- 
Transamerica-Pyramid-down moves that are wrecking 
San Francisco, 

We appreciate your continuing support. And we'll con¬ 
tinue to try to produce the best in alternative journalism 
for many anniversaries to come, ■ 


TABLE OF CONTENTS 


Introduction 16 years of printing the news and raising 
hell. [PageS) 

How PG&E robs SF of cheap power the Guardian s 
first story in its edition of March 27. 1969. out¬ 
lining the historic PG&E/City Ha! 1/Raker Act 
scandal, (J. B. Neilands, page 7) 

Why are your electric bills so high? comparing 
PG&E's rates with public power rates in ID Cal¬ 
ifornia cities, [Tim Redmond, page 9) 

PG&E yanks $44 million In profit out of SF in 1981 
and San Franciscans consequently lose S44 
mi [lion in cheap rates, low taxes and general 
fund subsidies. (Tim Redmond, page 11) 

Who owns PG&E Let's start with the Rothschilds of France 
and England. (E. J. Flynn, page 14) 

The power of the PG&E power trust pg&e scares 
hell out of local politicians and keeps its influ¬ 
ence dominant in local politics, business and 
media. [E. J. Flynn and Bruce B. Brugmann, 
page 15) 

'Prison bells will soon be ringin’ The PG&E scandal 
and me. a personal recollection by a former 
Guardian editor. [Michael E. Miller, page 16) 
The Diablo Canyon Dilemma your electric bin goes 
up and up whether or not the nuclear reactor 
goes on line. [Tim Redmond, page 18) 

What City Hall won’t tell you A mini-feasibility study 
by a group of CPAs in 1972 concludes that San 
Francisco can buy PG&E's electric distribution 
system in the city — and make as much as 321.9 
million a year, after payment of operating ex¬ 
penses and annual bond payments. Ten years 
later, it's still feasible and desirable to munici¬ 
palize PG&E. (Peter Petrakis and Alan Ramo, 
page 23) 

What you can do to do your bit to buy PG&E and to fight 
Diablo, nuctear power and your skyrocketing 
electric bill. (Tim Redmond, page 29] 

How SF disposes of its 'power problem’ Peter 
Petrakis picks up where Neilands left off [page 
7) and analyzes in 1970 what SF does with its 
cheap Hetch Hetchy power. [Peter Petrakis, 
cage 32) 

Dam the Tuolumne! Damn the taxpayers! 

updating Petrakis' analysis of how the city sells 
its Hetch Hetchy power, (Alan Ramo and Bruce 
8 Brugmann, page 34] 

The Bay Guardian vs. PG&E: 1969-1982 {Page 35) 


Departments 

On Guard —Page 3 

Political Alerts — Page 3 

Eight days a weekcalendar — Pages 24-25 

Super! ist of n uclear freeze 

cam paig n offices in the Bay Area — Rage 25 

Reviews — Page 39 

Movie and theater listings—Page 41 


16th Anniversary Task Force 

The Guardian's 16th anniversary special edi¬ 
tion was prepared by the PG&E Task Force; 
Bruce B. Brugmann, Bruce Dancis, E. J. Flynn, 
Alan Kay, Alan Ramo and Tim Redmond. 
Assistance was provided by Chris Gaiilardet. 
Michael Miller, Joe Neilands and Peter Pe- 


THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 













THE BAY GUARDIAN VS. PG&E - THE 16 YEARS’ WAR 



How PG&E robs San Francisco 
of 

cheap 
power 


litorU as 

AHOBeP 


NEWARK. 

Excerpt of J. B, Neiland's March 22, 1969 article, the Guardian's 
first in-depth story on the PG&E/Raker Act scandal 


B Y J. B. 


N E 1 L A N D S 



1969, The San Francisco Say Guardian Go, Inc. 

few months before he died last 
year, Franck Havenner sat up in 
his bed in a nursing home in San 
Francisco and told me of how the 
Pacific Gas & Electric Co. swindled San Fran¬ 
cisco out of hundreds of millions of dollars of 
cheap hydroelectric power. 

The story was incredible: PG&E and its political 
allies had defeated eight successive bond issues to estab¬ 
lish a municipal electric system in San Francisco and 
grant city residents and businesses the benefit of low 
cost power produced by the city’s Hetch Hetchy water 
system in the Sierras. 


The result: San Francisco 
has paid through the nose to 
PG&E for its power and the 
city loses about S30 million a 
year in profits it would get 
from a public system. 

Havenner, a longtime SF 
supervisor and later a U.S. 
representative, said: “In the 
beginning, we had the sup¬ 
port of some newspapers, 
but in the end the PG&E was 
able to buy them all out with 
their newspaper ads/* 

The PG&E/newspaper/ 
political combination got 
stronger with each bond is¬ 
sue. Today, you never hear 
about the city’s sacred 
pledges to build a public 
power system. 

How could this happen? 
How could Sacramento, Los 
Angeles, Palo Alto and a 
dozen other California cities 
get their own lucrative elec¬ 
tric distribution systems 
when SF couldn’t even get 
one when it had its own 
power? More: How could 
this happen when it is a 
specific condition of federal 
law for San Francisco, un¬ 
like any other American 
city, to build its own munici¬ 
pal electric distribution sys¬ 
tem? 


Abe Ruefs graft in 1906 
was peanuts, birdseed, com¬ 
pared to this. 

1900: a city desperate 
for water 

The story goes back to the 
turn of the century when 
San Francisco desperately 
needed an adequate water 
supply. Fifteen alternate 
sites were crossed off before 
Mayor Phelan filed for 
water rights on the Tuo¬ 
lumne River with money 
from his own pocket. 

Unfortunately, however, 
the site lay inside Yosemite 
National Park and the pro¬ 
posed dam would flood ex¬ 
quisite Hetch Hetchy Valley. 

Conservationists were 
furious and John Muir 
raged: 41 Dam Hetch Hetchy I 
As well dam for water tanks 
the people’s cathedrals and 
churches; for no holier 
temple has ever been conse¬ 
crated to the heart of man/" 
Understandably, Congress 
was reluctant to grant the 
brutal intrusion into Yose¬ 
mite. 

The impasse was resolved 
by Rep. John Edward 
Raker, from the state’s 
second (Mountain) district. 


He proposed to let San 
Francisco take the water 
from Yosemite, but in the 
process generate and distrib¬ 
ute low-cost hydroelectric 
power. 

It was the only federal 
grant of its kind ever made 
by Congress and it is certain, 
as interior Secretary Harold 
I ekes later emphasized, that 
it would never have been 
made without crucial condi¬ 
tions: that both water and 
power go directly to con¬ 
sumers and that no profits 
whatsoever from this un¬ 
precedented public grant go 
to private utilities. 

The act’s language was ex¬ 
plicit and there was no 
doubt, among supporters or 
opponents, about the public 
power intent of Congress. 
Thus on the floor debate: 

"Mr. Sumners: Is it the 
purpose of this bill to have 
San Francisco supply electric 
power and water to its own 
people? 

“Mr. Raker: Yes. 

“Mr. Sumners: Or to sup¬ 
ply these corporations, 
which will in turn supply the 
people? 

“Mr. Raker: Under this 
bill, it is to supply its own in¬ 
habitants First « . 

Muir and other militant 
conservationists were bit¬ 
terly disappointed by the 
Raker Act and the loss of 
Hetch Hetchy, but other 
conservationists, like Sen. 
George Norris of Nebraska, 
considered it a reasonable 
compromise. 

The Raker Act was the 
Magna Carta for cheap pub¬ 
lic power. It was thought to 
be tightly drawn in the pub¬ 
lic interest and virtually im¬ 
pervious to subversion by 
private power trusts. Its 
basic intent was to establish 
a municipal power distribu¬ 
tion system in San Fran¬ 


cisco, but it also allowed the 
sale of power to public 
agencies and recognized the 
prior claims of the nearby 
Turlock and Modesto irriga¬ 
tion Districts. 

However, the act stipu¬ 
lated, in strict terms especial¬ 
ly irritating to the private 
power lobby, that any at¬ 
tempt to transfer the water 
or power to a “person, cor¬ 
poration or association” for 
resale could result in revoca¬ 
tion of the federal grant . 

Water, not power 

In developing water, San 
Francisco has observed rea¬ 
sonable compliance with the 
Raker Act on the record. It 
has had little trouble passing 
expensive water bond issues 
to construct the enormous 
Hetch Hetchy system of 
pipes and tunnels that deliv¬ 
ers the water across the Cen- 


Raker Act of 1912 

San Francisco “is prohib¬ 
ited from ever selling or let¬ 
ting to any corporation... 
the right to sell or sublet the 
water or the electric energy 
sold or given to it... by San 
Francisco: Provided, That 
the rights hereby granted 
shall not be sold, assigned, 
or transferred to any private 
person, corporation, or as¬ 
sociation, and in case of any 
attempt to so sell, assign, 
transfer, convey, this right 
shall revert to the Govern¬ 
ment of the United States.” 
(Section 6, Raker Act, Dec¬ 
ember 19, 1933) 

San Francisco City 
Charter of 1932 

The newly adopted city 


tral Valley, under San Fran¬ 
cisco Bay and into the Pen¬ 
insula’s Crystal Springs Res¬ 
ervoir. There’s been no re¬ 
luctance to “go into the 
water business” in San Fran¬ 
cisco. 

In developing power, 
however, San Francisco has 
gone up against fortress 
PG&E and has failed miser¬ 
ably in complying with the 
Raker Act. Ickes was here 
on Oct. 24, 1934, for the 
celebration of the First flow 
of Hetch Hetchy water to 
reach Crystal Springs. He 
mused in his diary: 

“San Francisco also 
develops power from this 
water .... Unfortunately, 
private utilities have such a 
grip on San Francisco that it 
cannot actually sell its own 
power to users in San Fran¬ 
cisco. I held there was a vio¬ 
lation of the Act . . . the 


charter states, “It is the de¬ 
clared purpose of the city 
and county, when public in¬ 
terest and necessity demand, 
that public utilities shall be 
gradually acquired and ulti¬ 
mately owned by the city 
and county.” 

U.S. Supreme Court 
decision of1940: 

Section 6 requires the 
“sale and distribution of 
Hetch Hetchy power exclu¬ 
sively by San Francisco.,. 
directly to consumers in the 
belief that consumers would 
thus be afforded power at 
cheap rates in competition 
with private power com¬ 
panies, particularly Pad He 
Gas & Electric Company,” 
(U.S. Supreme Court, in US 
v. City and County of San 
Francisco ( 1940)) 


newspapers and most of the 
politicians have seen to it, by 
propaganda and other devi¬ 
ous methods, that a method 
of complying with the Act 
has been defeated.” 

Norris lamented in his 
biography that, as a sup¬ 
porter of the Raker Act, he 
had “underestimated the re¬ 
sourcefulness” of PG&E. 
“When 1 spoke so hopefully 
and so confidently (not only 
I but many others) it was in¬ 
credible that a great utility 
could control the policies of 
city government in San 
Francisco . , , to defeat the 
original spirit and purpose 
of Hetch Hetchy. But it has 
done all this.” 

PG&E moved in early and 
has prevented the full public 
development of Hetch 
Hetchy power to this day. 
Hetch Hetchy’s First small 
hydroelectric generator, 
Early Intake Powerhouse, 
went on the line in 1918. It 
was immediately connected 
to the Sierra and San Fran¬ 
cisco Power Co. (later 
merged into PG&E). In¬ 
terior declared the accord il¬ 
legal on June 8, 1923, but 
nothing was pressed since 
only a small amount of 
power was involved. 

With the completion of 
Moccasin Powerhouse in 
1925, a substantial block of 
hydroelectric power became 
available; to bring the en¬ 
ergy to San Francisco as re¬ 
quired by the Raker Act, the 
city began laying a steel 
tower transmission circuit in 
the direction of San Fran¬ 
cisco. 

It was strung all the way 
to Newark, some 99 miles, 
but was stopped abruptly at 
Newark on the east shore of 
San Francisco Bay. Here, 
conveniently, PG&E had a 
substation and here, conve* 
con tinued next page 


SF’s public power mandate 


7 


THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 

















THE SAN FRANCISCO BAY GUARDIAN. OCTOBER 6,1982 


THE BAY GUARDIAN VS. PG&E — THE 16 YEARS 9 WAR 


continued from previous page 

niently and in obvious antici¬ 
pation of a new energy load, 
PG&E had just laid a trans- 
Bay* high voltage cable to 
span the remaining 35 miles 
to San Francisco, 

Although the city had 
purchased enough copper 
wire to complete the Hetch 
Heidiy line, word suddenly 
rocketed from city hall that 
further construction funds 
were exhausted* San Fran¬ 
cisco’s two power com¬ 
panies, Great Western and 
PG&E, refused to sell their 
systems to the city, and the 
board, instead of using emi¬ 
nent domain to acquire 
them, approved a contract 
on July I, 1925, to hand 
over Hetch Hctchy power to 
PG&E at Newark. The cop¬ 
per wire was stored quietly in 
an SF w r arehouse and iO years 
later sold for scrap. 

The big sellout 
It was a sellout worthy of 
chronicling by Lincoln 
Steffens and Frank Norris, 
The city produces the power, 
but PG&E grabs it for 
wholesale, then wheels it in¬ 


to the city at exorbitant re¬ 
tail rates. As the San Fran¬ 
cisco Examiner then ob¬ 
served: 

“It is a wrongful and 
shameful policy for a gram 
of w r ater and power privilege 
in the Yosemite National 
Park Area to be developed 
at the expenditure of $50 
million by the taxpayers of 
San Francisco, only to have 
its greatest financial and 
economic asset, the hydro¬ 
electric power, diverted to 
private corporation hands at 
the instant of completion; to 
the great benefit of said pri¬ 
vate corporation, and at an 
annual deficit to the city of 
San Francisco.’' 

In the 1925 city election, 
every incumbent supervisor 
was defeated who voted for 
the 1925 contract and pre¬ 
sided over the establishment 
of PG&E’s tollgate at 
Newark. The people wanted 
public power and the new 
board determined the city 
should bond itself in what¬ 
ever amount necessary to 
buy out PG&E and get it* 

The first S2 million bond 


issue in 1925 fell before a 
powerful PG&E onslaught, 
but it still got 52,216 for, 
50,727 against (two-thirds 
needed for passage), In all 
from 1925 to 1941, PG&E’s 
enormous political influence 
defeated eight bond propo¬ 
sitions to buy all or part of 
PG&E distribution proper¬ 
ties. 

To defeat the bonds, 
Havenner told a congress¬ 
ional committee in 1942, 
PG&E had spent at least 
$200,000 in the previous ten 
years; Ickes broke the 
amount down further: 
$11,876 in 1935; $25,330 in 
1937; $59,755 in 1939 and 
much, much more in 1941. It 
now* spends hundreds of 
thousands each year in poli¬ 
tical and charitable dona¬ 
tions* 

PG&E’s strategy, Ickes 
testified, was to “spread 
throughout the city the 
word that the Raker Act 
could be easily amended” 
and to confuse the issue by 
saying the city “had been 
discriminated against” by 
the act. ' 


PG&E laid it on thick in 
an expensive series of seven 
ads in the daily press; the 
press responded by repeating 
and embellishing the PG&E 
line. The Chronicle, for ex¬ 
ample, ran nasty cartoons 
and editorial comments im¬ 
plying this was all a city hall 
power grab: “If the city hall 
were not so busy trying to 
aggrandize itself by clutch¬ 
ing more business to muddle 
with . * *” 

PG&E's voice 

{PG&E maintained close 
connections with most news¬ 
paper managements, but 
Chronicle/PG&E connec¬ 
tions have for decades been 
intimate through family re¬ 
lationships, notably the 
Tobin and de Young dynas¬ 
ties. Joseph O. Tobin, who 
became a Chronicle owner 
by marrying Mike de 
Young’s daughter, Con¬ 
stance, is a nephew of 
Joseph S. Tobin, a onetime 
PG&E director. The Tobins 
live in Hillsborough and 
have long been associated 
with the Hibernia Bank* 


Mike de Young and his 
brother founded the Chron¬ 
icle*) 

His patience exhausted, 
Ickes meanwhile filed suit in 
federal court to throw out 
the PG&E’s phony 1927 
contract. The case ultimately 
went to the U.S. Supreme 
Court which ruled, on April 
22, 1940, that San Francisco 
had been illegally disposing 
Hetch Hetchy power to 
PG&E for the past 15 years* 

More: that the act re¬ 
quired a “publicly owned 
and operated power system” 
in San Francisco. 

It is difficult, almost im¬ 
possible I found, to deter¬ 
mine how* long this illegal 
sale ^continued, how much 
city users were overcharged 
and what is the city’s current 
legal status. It appears to 
me, after months of re¬ 
search, that the city is still 
under a federal court injunc¬ 
tion. 

A significant sidelight is 
then-Rep* Clair Engle’s in¬ 
vestigation in 1955 into 
another diversion of Hetch 
Hetchy power to PG&E. 
Engle’s biting cross-examin¬ 
ation of public officials and 
his ability to disentangle 
complicated issues proved 
conclusively that San Fran¬ 
cisco was allowing irrigation 
districts to serve as a conduit 
to transfer Hetch Hetchy 
power to PG&E. 

Engle quoted figures com* 
piled by the Federal Power 
Commission showing that 
24.7% of the power pur¬ 
chased by Modesto and Tur¬ 
lock “is currently and for a 
period from 1945 to 1953” 
was sold to PG&E. Forty- 
eight percent of this total 
was Hetch Hetchy power, 
the FPC said, 

Engle asked the American 
Law r Division of the Library 
of Congress to research this 
point. It advised him on 
May 22, 1956, that SF had 
sold dump power to PG&E 
since 1945 and by letter 
agreement had extended the 
arrangement into 1962. It 
also said that SF had been 
selling power to Modesto 
and Turlock, which at the 
same time were furnishing 
PG&E about the same 
amount they were buying 
from the city. M and T have 
plenty of pow r er through 
their own generating plants 
at Don Pedro and La 
Grange* 

To determine if this un¬ 
lawful transfer of power 
continues, the following 
data is required: (3) hourly 
production by district gener¬ 
ating plants; (2) simultane¬ 


ous receipt by the districts 
from Hetch Hetchy; (3) 
simultaneous delivery from 
the districts to PG&E. The 
Interior Department has re¬ 
fused my repeated requests 
for this public information. 

We are left with a signifi¬ 
cant remark In the Modesto 
District’s 1967-68 annual re¬ 
port: “These once bitter en¬ 
emies, the irrigation dis¬ 
tricts and San Francisco, 
work in dose harmony to* 
w*ard the full economic de¬ 
velopment of the water and 
power resources of the Tuol¬ 
umne River watershed,” 

As a result of PG&E’s in¬ 
fluence, Hetch Hetchy’s for¬ 
midable power output is 
dribbled away in a frag¬ 
mented pattern that brings 
relatively little revenue to the 
city. Besides the irrigation 
districts, power is sold to 
several low-paying San Fran¬ 
cisco industrial consumers, 
which are served by PG&E 
lines from Newark and War- 
nervi lie substations* The city 
pays for transmission charges. 
Including losses* 

City power is wheeled into 
San Francisco on PG&E toll 
lines and the company until 
recently levied an outrage* 
ous toll. (PG&E buys Hetch 
Hetchy power at Newark for 
$2 million, then resells it to 
SF consumers for S9 million, 
congressional testimony 
showed in 1941. Total over* 
charge: $6,600,000* Multiply 
these totals year by year and 
you begin to get the dimen¬ 
sions of this steal from the 
city treasury*) 

Hetch Hetchy power goes 
to the airport, Muni and 
street lights. Everything else, 
notably the lucrative, tightly 
packed retail market that 
forms the base of PG&E’s 
empire, is served by PG&E. 

Since Interior Secretary 
Harold Ickes two decades 
ago, the Interior Depart¬ 
ment has been notoriously 
lax in pushing San Francisco 
to enforce the Raker Act. 
James Carr stepped out of 
this don’t-ruffle-PG&E at¬ 
mosphere in Interior to be¬ 
come San Francisco’s gen* 
eral utilities manager* He 
has kept PG&E’s monopoly 
intact, untroubled and un¬ 
questioned in San Francisco. 

I asked Carr, shortly after 
he took office in 1964, when 
the city would enforce the 
Raker Act. Carr replied in a 
letter, 51 years after the 
Raker passed as the Magna 
Carta of public power, that 
it was “premature to discuss 
municipal distribution of 
power in San Francisco.” In 
March, 1969, it still is. ■ 


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THE BAY GUARDIAN VS, PG&E — THE 16 YEARS 1 WAR 


BY TIM 


REDMOND 


ML/} n average San Francisco resident 
f who uses 500 kilowatt hours of 

MmJL electricity a month paid PG&E 
J f $41,38 for the month of January 

1982. A resident of Palo Alto paid only $10.67 

for the same 500 kwh. 

Why? 

Palo Alto residents own their own utility, and keep 
the millions of dollars that would otherwise become 
corporate profits. And most of the energy Palo Alto 
buys is generated by safe, efficient and cheap hydro¬ 
electric facilities owned by the federal government— 
power-producing river dams similar to the Hetch 
Hetchy dam owned by the city of San Francisco since 
1913. 


The electricity generated 
by San Francisco’s Hetch 
Hetchy dam on the Tuol¬ 
umne River, however, isn’t 
used to lower electric bills for 
its owners—San Francisco 
taxpayers—nor does it raise 
revenue for the city—revenue 
that could mean lower prop* 
erty taxes. 

Instead, it’s effectively 
sold to PG&E—which in turn 
sells it back to the city, 
making a sweet profit — and 
to out-of-San Francisco 
chemical companies and 
municipal utility districts in 
Turlock and Modesto, which 
sell it to their own citizens at 
rates less than half as high as 
PG&E’s. 

Higher ratesfor 
San Francisco 

A Guardian survey reveals 
that electric rates in 11 North¬ 
ern California cities with 
municipal utilities are vir¬ 
tually all lower than rates in 
San Francisco—a city which, 
unlike the rest of the others, 
already owns its own elec¬ 
trical generating system, but 
doesn’t use it to benefit its 
residents, (See chart) 

PG&E claims in a flyer 
against Prop. K its electric 
rates “compare favorably 
with those of other utilities/’ 
“No utility in this country, 
whether privately or publicly 
owned, is immune from in¬ 
flation and today’s higher 


costs in providing electric 
service,” the flyer says. 

This last statement is pa¬ 
tently false. There are at least 
four municipalities in North¬ 
ern California whose electric 
rates have increased far 
slower than the rate of infla¬ 
tion. One of them—the city 

of Palo Alto’s municipal 
electric system—actually 
charges less in 1982 for 500 
kwh of electricity than it did 
in 1972. 

In Sacramento, electric 
rates increased 35%—from 
SI 1.59 to SI5.70—between 
January 1972 and January 
1982. 

PG&E rates in San Fran¬ 
cisco, meanwhile, have 
jumped nearly 300%, from 
$ 10.40 in 1972 to S41.38 early 
in 1982. 

PG&E also claims “cus¬ 
tomers ofi 1 of the 21 munici¬ 
pally-owned electric systems 
in California, including Los 
Angeles, pay a higher rate 
than PG&E charges the aver¬ 
age residential customer in 
San Francisco.” There is 
some truth to this statement, 
which was based on rates as 
of summer of 1982, because 
the extreme level of precipi¬ 
tation last winter resulted in 
an extraordinary cheap 
hydroelectric power bonus 
for PG&E. However, the 
statement is not correct for 

continued next page 


Why are your 
PG&E electric 
bills so high? 



“DIRTY ft»L IN J * WHY 
THE ECOLOGY f 
MOVEMENT" i ,s 6aX> 


AH/ HERE IT IS.. 

GASP CHOKE 

THIS JUST c«lT BE 



u^t/ a Uotice ; 
“WE TO we. INCREASED 
COST OF MAILING you 
ALL THIS HEAVY 
information, me 
ARE FORCED lb RAISE 
OUR RATES AGAIN " 




PG&E vs. Public Power in Northern California: Public Power is cheaper 


/ 

f 

/ 

V 

/ 

/ 

** 

/ 

/ 

/ 

/ 

/ 

j 

/ 

/ 

/ 

/ 

4 

V 

/ 

(PG&E) 

(Sacramento 

Municipal 

Utilities 

District) 

(Alameda 
Bureau of 
Electricity) 

(Santa Clara 
Municipal 
Electric 
Dept.) 

(City of Lodi) 

(City of 
Palo Alto) 

(Turlock 

Irrigation 

Dist.) 

(City of 
Ukiah) 

(Gridley 

Municipal 

Utility) 

(City of 
Redding) 

(L.A. Dept, of 
Water and 
Power) 

$41.38 

15.70 

39.69 

23.33 

36.44 

10.67 

16.20 

31.48 

16.50 

10.39 

34.65 

25.89 

14.00 

30.13 

14.79 

24.60 

9.95 

14.20 

26.35 

16.50 

10,39 

32.60 

19.79 

13.25 

20.13 

14.66 

20.75 

9.39 

14.20 

18.77 

16.50 

10.39 

29.80 

18.99 

13.25 

18.84 

13.14 

17.11 

9.19 

14.20 

N.A. 

26.78 

10.39 

25.45 

13.36 

12.38 

12.50 

15.61 

22.44 

8.19 

14.20 

N.A. 

26.78 

9.75 

24.10 

13.36 

12.38 

12.50 

13.73 

19.70 

7.99 

13.42 

N.A. 

26.78 

8.15 

20.75 

10.51 

9.21 

12.50 

11.42 

17.11 

8.68 

11.63 

N.A. 

26.78 

7.51 

19.30 

10.51 

9.21 

12.29 

11.71 

14.22 

12.08 

11.54 

N.A. 

26.78 

6.57 

17.40 

10.51 

12.59 

11.81 

8.58 

12.74 

10.80 

10.06 

N.A. 

26.78 

6.57 

15.10 

10.40 

12.59 

10.55 

8.38 

12.76 

10.80 

N.A. 

N.A. 

N.A. 

6.57 

12.45 

10.40 

11.59 

9.20 

8.38 

12.76 

10.80 

N.A. 

N.A. 

N.A. 

6.57 

10.60 


1982 
1981 
1980 
1979 
1978 
1977 
1976 
1975 
1974 
1973 
1972 

Alt rates are lor 500 kilowatt hours of domestic electric ser- 350 McAlltstef h SF. 
viceduring the month olj angary Z Sacramento Municipal Utility District generates almost 

1. PG&E’s San Francisco rates were collated from tarritf all of its own power— nearly 40% of it through hydro projects 
sheets on file with the California Public Utilities Commission, The balance is purchased from the federal government's 

This chart compares PG&E’s electric rates In San Francisco with rates in nine public 
power cities in Northern California, plus Los Angeles. It demonstrates that San Francisco 
residents pay more for PG&E’s private power than do residents In cities with public 
utilities. For further explanation, see the accompanying article. 


Western Area Power Adminisiration {WAPA). Source: SMUD. 

3* The Alameda Bureau of Electricity buys almost all its 
power wholesale from PG&E, and satis il to its customers. 
Source:.Alameda Bureau of Electricity. 

4. Santa Clara Municipal Electric Dept, purchases power 
from both PG&E and WAPA, Source: Santa Clara Municipal 
Electric Dept. 

5. Lodi buys most of Its power from PG&E and the Pa lance 
from WAPA, Like Alameda. Lodi seNs I he power to Its custch 
mers at a rate that allows some profit to be pumped back into 
cily coffers — resulting in lower property taxes. Source: City 
of Lodi. 

6. Palo Alto buys nearly all its power from WAPA, Source: 
City of Palo Alto. 


7. Turlock Irrigation District generates about 55% of its 
own energy, and purchases the rest from San Francisco’* 
Hetch Hetchy project.SourcetTurlocKIrrigation Diet, 

8. Ukiah buys mosl of Its power from PG&E. Source: City of 
Ukiah. 

S. Grid I ay purchases most Of its power from WAPA. 
Source: Gridley Municipal Utility. 

10. Redding buys nearly ail its power from WAPA, Source: 
City of Redding. 

11. Los Angeles Department of Water and Power gener¬ 
ates most of its own energy. The rates shown from 1972-1981 
are based on average charges provided by the cep an mens. 
Source: LA. Dept, of Water and Power. 






THE SAN FRANCfSCO BAY GUARDIAN, OCTOBER 6.1982 











































THE SAN FRANCISCO BAY GUARDIAN. OCTOBER 6,1982 



THE BAY GUARDIAN VS. PG&E - THE 16 YEARS 1 WAR 


Hetch Hefchy Valley in Yo Semite National Park, before Onset) and after 


continued from previous page 
January, 1982, the date we 
have used for comparison of 
electric rates. Indeed, all II 
cities in Northern California 
that have public power had 
rates lower than PG&E's in 
January 1982. in any event, 
of the 11 cities PG&E cites, 
nine are situated in Southern 
California, where inexpen¬ 
sive hydroelectric power is far 
less available than in the rest 
of the state. For example, 
four of these cities—Los An¬ 
geles, Glendale, Burbank 
and Pasadena—rely on fossil 
fuels for about 72% of their 
power. 

Cheap public 
hydropower 
We also found that utilities 
that purchase government- 
owned hydroelectric power 
have rates drastically lower 
than PG&E's. Residents of 


Palo Alto, Santa Clara, Sac¬ 
ramento, Turlock, Modesto 
and Gridley all pay less than 
half for their electricity than 
San Franciscans do. 

Those cities have contracts 
to buy power they can't gen¬ 
erate themselves (only Sacra¬ 
mento has its own generating 
faci 1 it ies) from the fede ral 
government's Western Area 
Power Association. The as¬ 
sociation isn't, as PG&E 
claims, “government-subsi¬ 
dized 11 —it hasn't lost money 
in years, Dave Magaw r , 
WAPA’s associate regional 
marketing manager, told the 
Guardian. It does, however, 
sell electricity at a “break¬ 
even” rate—about a tenth of a 
cent per kilowatt hour. It 
costs PG&E between five and 
six cents to generate a kilo¬ 
watt hour of electricity in a 
fossil-fuel or nuclear plant. 

WAPA's power, PG&E 


correctly points out, is all al¬ 
located by contracts that 
don't begin to expire until 
1994. So San Francisco can't 
Immediately take advantage 
of this power source. What 
PG&E doesn't say, of 
course, is that the city already 
owns its own hydro plant— 
Hetch Hetchy. 

PG&E also fails to point 
out that cities possessing their 
own utilities have a choice: 
they can either sell the elec¬ 
tricity—like WAP A—at a 
non-profit level, or they can 
sell it at enough “profit" to 
underwrite some other city 
expenses, and keep property 
taxes down. 

PG&E is a private com¬ 
pany responsible to its stock¬ 
holders—many of whom 
have little or no connection to 
San Francisco (see “Who 
Owns PG&E," p. 14). As a 
result, it is obligated to sell its 


power at rates as high as per¬ 
mitted to make as much prof¬ 
it as possible. 

The system by which our 
electric rates are determined, 
the methods PG&E uses to 
generate power and the com¬ 
pany’s questionable fiscal 
management all contribute to 
our soaring bills. 

Guaranteed profits 

Since the company has a 
guaranteed monopoly on 
power distribution in San 
Francisco (as well as the rest 
of its distribution area), the 
California Public Utilities 
Commission must approve 
the company's rate structure. 
The commission, which has 
gone out of its way to be re¬ 
ceptive to what the industry 
feels it needs, attempts to set 
rates that are fair to the con¬ 
sumers, and also allow the 
utility a “fair rate of return" 


on its investments. 

PG&E's “investments" 
include anything it buys, 
from hard hats to trucks to 
office machines to nuclear 
power plants. PG&E adds up 
the original cost of every¬ 
thing it has purchased and 
comes up with a figure 
known as the “rate base.” 
The PUC also calculates the 
“rate base,” and if the two 
don't jibe, the commission 
adjusts PG&E's estimate. 

The PUC, in conjunction 
with PG&E, then determines 
a “fair rate of return," based 
on the nation's economy, in¬ 
terest rates and related fac¬ 
tors. Last January this was 
set at 12.2%. The rate of re¬ 
turn is multiplied by the rate 
base and added to operating 
costs—salaries, basic fuel 
costs, taxes and the like. The 
resulting figure determines 
what PG&E is allowed to 


clear across its system as op¬ 
erating revenues. Fuel costs 
that exceed what the com¬ 
pany expects to pay are 
added to the rates later as 
“fuel cost adjustments." 

PG&E customers pay not 
only the “return" on 
PG&E's investments, but, 
over time, the original cost of 
the investment as well. The 
Diablo Canyon nuclear power 
plant, for example, will be 
“depreciated” over 30 years— 
each year the plant operates, 
the customers pay I/30th of 
the original cost, along with 
the “return.” In Diablo *s case, 
depreciation amounts to 
about $82 million a year. 

After the PUC has decided 
how much money PG&E is 
allowed to clear, the actual 
rates are set—designed by the 
commission and PG&E to 
meet the state's standards for 
residential, commercial and 


to 



vntttWis 


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T 0 ”"" 5 

‘.o<<s|r^ bu ‘' dc ' 

3 design 





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THE BAY GUARDIAN VS- PGM - THE 16 YEARS’ WAR 


continued from previous page 


industrial charges, to reflect 
the genera] cost of providing 
each type of service and to 
generate, across the system, 
the agreed-upon revenue for 
PG&E. 

This means PG&E is essen¬ 
tially guaranteed a profit ev¬ 
ery year on operations—un¬ 
less it badly mismanages rts 
resources. If fuel costs go up, 
the company simply increases 
its rates to compensate through 
the “fuel adjustment 
charge,” which allows 
PG&E to automatically pass 
on any increases in fuel costs 
to its customers. 

It also means PG&E has no 
incentive to lower costs—in 
fact, the utility has an incen¬ 
tive to raise the size of the rate 
base, since any additions to 
the rate base earn a 12 . 2 % re¬ 
turn—guaranteed. Diablo 
Canyon will increase the rate 
base by about $2.5 billion, 
and generate about $300 mil¬ 
lion in annual revenues, no 
matter how much electricity 
it produces. (Rates, re¬ 
member, aren't based on 
how much electricity is deliv¬ 
ered, but rather on the size of 
the rate base.) The Heims 
Pumped Storage Project, a 
massive hydroelectric plant 
the company is building in 
the Sierras, will raise the com¬ 
pany revenues by about $730 
million when it gets added to 
the rate base in 1983. 

Technically, the PUC 
must approve all additions to 
the rate base, and no project 
may be added until it is “on 
line”—actually providing 
service to the customers, His- 
torically, however, this 
hasn't been much of a prob¬ 
lem. “Certificates of Public 
Convenience and Necessity,” 
required for a project to go 
into the rate base, have been 
issued more or less routinely 
over the years. Diablo Can¬ 
yon and the Helms Project 
are the first two sizable proj¬ 
ects that may not get final ap¬ 
proval without lengthy nego- 
tiationsand discussion. 


PG&E's pitiful 
management record 

PG&E is fond of compar¬ 
ing municipal utilities to 
problem-ridden government 
operations, such as the LLS. 
Postal Service or San Fran¬ 
cisco's MUNI. In fact, it 
would be difficult to imagine 
a more blatant example of 
financial mismanagement 
than PG&E's two major con¬ 
struction projects of the last 
decade—Diablo Canyon and 
Helms. Diablo, the twin 
nuke PG&E has been buil¬ 
ding in San Luis Obispo since 
the late 1960s, has become 
the nation's most hotly-con¬ 
tested nuclear power plant 
because of safety questions 
and cost overruns. The plant 
Co sr #ir i?inally projected to 
cosi S350 million; 

PG&E now admits it will 
have poured more than $2.5 
billion into the plant by the 
time Unit One becomes oper¬ 
able. And critics say costs 
may be even higher than that. 

The Helms Project is de¬ 
signed to provide hydroelec¬ 
tric power at times when de¬ 
mand is high, and to “store” 
energy when demand is low, 
as in the evening and late 
night hours. The project in¬ 
volved blasting hundreds of 
ions of granite out of a hill¬ 
side in Fresno County to con¬ 


struct a huge tunnel between 
two lakes—one about 2,000 
feet higher than the other. 

When demand is high, 
water will drop through the 
tunnels, turning three tur¬ 
bines below. When demand 
is low, the turbines will be 
“reversed,” pumping the 
water back up to the upper 
lake. 

Since only about 75% of 
the energy used to pump the 


water up can be recovered 
when it falls back down, the 
plant doesn't really generate 
energy at ail; it just stores it 
for later. How ever, the added 
ability to regulate electric 
“loads” will, PG&E says, al¬ 
low it to keep from building 
more power plants to meet 
peak demand, and thus save 
money for ratepayers. 

The project, however, has 
continued page 13 


I 


PG&E yanks 
$44 million in 
profit out of 
San Francisco 
in 1981 


BY TIM REDMOND 


I n 1971 Guardian Utilities 
Editor Peter Petrakis cal¬ 
culated that the city of San 
Francisco's annual profit loss 
to PG&E exceeded $35 mil¬ 
lion a year — in other words, 
PG&E took $35 million each 
year from the residents of 
San Francisco, and deposit¬ 
ed it in the wallets of its 
stockholders. 

Petrakis' first attempt to 
arrive at this figure involved 
“scaling up” the profits of 
public power cities such as 
Palo Alto — increasing them 
in proportion to the size 
difference between the cities. 
The California Public Utili¬ 
ties Commission rejected that 
idea as inaccurate. 

Searching further, Petrakis 
found that PG&E does not 
reveal to the public the profit 
it makes in any individual 
city. By law, it must list gross 
revenues for each city it ser¬ 
vices, but not expenses. 

So he came up with an esti¬ 
mate of PG&E's San Fran¬ 
cisco expenses through multi¬ 
plying the number of kilowatt 
hours sold in the city by the 
utility's average cost — system- 
wide — of producing one 
kilowatt hour of power* He 
then estimated the adminis¬ 
trative, distribution and sales 
expenses for the city by taking 
the fraction of PG&E's total 
costs in those departments 
that could realistically be 
attributed to San Francisco. 


Since San Francisco in 1971 
comprised 12 % of PG&E's 
customers, and since cus¬ 
tomer-related expenses in the 
city are about half what they 
are system-wide because San 
Francisco is so densely popu¬ 
lated, Petrakis took 6 % of 
PG&E's total expenditures 
in each of these categories. 

The $35 million estimate 
was about the same as the one 
arrived at by “scaling up” 
Palo Alto's profits. 

These days, that process is 
a little tougher. PG&E's 
“resource mix” — the mixture 
of electrical generating meth¬ 
ods the utility uses — varies 
tremendously from month- 
to-month, as hydro power 
becomes more or less avail¬ 
able, and as the company 
shifts its Fossil fuel usage 
back and forth between oil 
and natural gas, depending 
on price and availability. So 
it is difficult to come up with 
an average figure for unit 
production cost. 

But a reasonable estimate 
can be obtained by averaging 
out total electric production 
and expenses over the year 
1981, based on figures in 
PG&E's annual report to the 
PUC. As expected, it's much 
higher than it was in 1971. 

PG&E sold 61.75 billion 
kilowatt hours of electricity 
in 1981 throughout its ser¬ 
vice territory. Total electric 
generation expenses for 1981 




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were S2.578 billion — about 
4,17 cents a kilowatt hour. 

That means PG&E's gen¬ 
erating expenses for San 
Francisco were about S i 51 
million. PG&E sold 3.63 
billion kwh in the city in 
1981. 

Total distribution, sales 
and customer service expenses 
amounted to $494 million. 
In 1981 about 11% of PG&E's 
customers were in the city; 


since Petrakis calculated 
that PG&E's San Francisco 
expenses are about half the 
expenses system-wide, the 
city represents about 5.5% of 
the $494 million, or $27 
million. 

So PG&E's total San Fran¬ 
cisco expenses in 1981 were 
about SI78 million. Deduct¬ 
ing that cost from the $222 
million PG&E reported as 
total San Francisco revenues. 


we arrived at an approximate 
San Francisco profit for 
PG&E of $44 million in 1981. 

If the city owned its own 
electric system, that money 
would either disappear from 
residents' electric bills (an 
average yearly savings of about 
$144) or become extra city 
revenue; enough, say, to sub¬ 
sidize 25C MUNI fares for 
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THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 







































THE BAY GUARDIAN VS. PGM — THE 16 YEARS’ WAR 


And now, SF ratepayers may have 
to pay higher electric bills because 
of the cost overruns in PG&E's Helms 
project. State auditors found PG&E 
had no incentive to keep costs down. 


continued from page 71 
been so plagued by cost over¬ 
runs that it spurred a special 
investigation by the Joint 
Legislative Audit Committee 
of the State Assembly* The 
results of that investigation, 
released Aug, 25th, recom¬ 
mend the FUC adopt new 
procedures to regulate utility 
construction projects, so 
problems such as those that 
plagued the Helms project 
may be avoided in the future, 
“The auditors found that the 
CPUC does not have ade¬ 
quate procedures for approv¬ 
ing and monitoring power 
generation projects such as 
the Helms Pumped Storage 
Project*, .As a result, utility 
customers may eventually 
pay for construction costs 
that should not have been in¬ 
cluded in the rate base,” the 
report says. 

The audit committee 
blames the high cost of the 
project largely on the con¬ 
tract PG&E signed with its 
main contractor, Granite- 
Ball-Groves Inc* The con¬ 
tract allows Granite-Bail- 
Groves a flat fee of $18 mil¬ 
lion for handling the project* 
PG&E pays all the bills. 

Since PG&E assumes it can 
eventually pass all the costs 
onto the ratepayers, the com¬ 
pany had no incentive to keep 
costs down. Neither did 
Granite-Ball-Groves, which 


made essentially the same 
amount no matter what the 
final costs were. The contract 
contained a provision for a 
$2.5 million penalty if the 
work cost too much but, the 
auditor said, that point 
passed long ago; the con¬ 
tractor now has little reason 
to attempt to cut costs. 

Wall St. nervous 
about PG&E 

The audit committee mem¬ 
bers aren't the only ones 
concerned about PG&E’s fi¬ 
nancial mismanagement. 
Wall Street investment ana¬ 
lysts are also beginning to 
sound a note of caution con¬ 
cerning PG&E’s financial sit¬ 
uation. Both Standard and 
Poor’s and Moody's—two 
of the best-known securities 
analysis firms on the stock 
market—lowered their rat¬ 
ings on PG&E’s bonds early 
in 1982. 

In both cases, the high 
costs involved in building 
Diablo Canyon—and uncer¬ 
tainty over when it will actu¬ 
ally be in good enough shape 
to operate—were the de¬ 
ciding factors. 

Investment analysts have 
been maintaining a cautious 
stance on PG&E stock. 
“Overall, we regard the fun¬ 
damental situation of Pacific 
Gas and Electric to be below 
that of the average electric 


company,” an August 1981 
Merrili Lynch report on 
PG&E stated. “However, 
the forthcoming completion 
of [Diabio] and additional 
rate relief should help bring 
about substantia] improve¬ 
ment in the company’s situ¬ 
ation,” 

Investment analysts aren’t 
talking to the press about 
PG&E these days, however. 
Judith Warrioek, a vice pres¬ 
ident and financial analyst 
for Dean Witter in New 
York told the Guardian 
through a spokesperson that 
she “will not be quoted on 
anything to do with PG&E 
for a San Francisco news¬ 
paper.” 

Efforts to keep the price of 
the company's stock value up 
in the face of major cash out¬ 
lays for construction have 
put the company in a poten¬ 
tially tenuous financial posi¬ 
tion. (See accompanying art¬ 
icle on Diablo Canyon.) 

The benefits of 
municipalization 

Included in the price 
PG&E customers pay for 
electricity is the interest the 
company must pay on the 
money it borrows to finance 
its multi-billion dollar 
construction program. At 
ieast half of the money spent 
on the Diablo and Helms 
projects was borrowed, 
either from banks or by sell¬ 
ing corporate bonds, accord¬ 
ing to PG&E spokesman 
Dennis Pooler. 

Since PG&E is a private 
company, the bonds it sells 
are not tax-free; this means 
the interest the company 


(read the customers) pays are 
much higher than they would 
be if the construction was fi¬ 
nanced by tax-free municipal 
bonds. 

Of course, even tax-free 
bonds aren’t cheap these 
days. PG&E estimates that 
purchase and takeover of its 
San Francisco system would 
cost more than SI billion; 
even at 12% interest, the debt 
service on a bond issue could 
cost San Franciscans $124 
million a year for 3D years, 
the company says. 

Not everyone agrees with 
PG&E's estimates of the 
value of its own property* It's 
an adage that you don’t take 
the seller’s word for the value 
of its product. Only an inde¬ 
pendent feasibility study could 
show that. There is also dis¬ 
agreement about what the city 
might decide to buy—the 
power lines and distribution 
system by themselves, or in 
conjunction with PG&E’s 
two thermal generating 
plants at Hunter’s Point and 
Potrero. 

The “irony”’ of Prop. K, 
PG&E says, is that Hetch 
Hetchy can provide only 
about 20% of the customer 
load in San Francisco; “the 
rest would have to be bought 
from PG&E.” 

However, if the city pur¬ 
chased the Potrero and 
Hunter's Point plants, to¬ 
gether with Hetch Hetchy 
power the three sources could 
provide far more power than 
the city now uses—we would 
be able to sell a good bit back 
to PG&E. But even if the city 
relied only on Hetch Hetchy, 
PG&E's figure is dubious. 


According to PG&E’s 
1981 annual report filed with 
the PUC, the company sold 
3.63 billion kilowatt hours of 
electricity in San Francisco in 
1981, That year Hetch 
Hetchy facilities generated 
2.203 billion kwh—close to 
60% of the city’s use. Of 
course, not much of that ever 
made it to San Francisco; 
only 557 million kwh were 
sold to “municipal ac¬ 
counts” (MUNI, the airport, 
street lighting, etc,), PG&E 
“wheeled” that power from 
its Newark substation to the 
city, which means the Hetch 
Hetchy power was pooled 
with PG&E’s power at 
Newark, and an equal 
amount was returned to the 
municipal facilities at a rate 
close to what PG&E normal¬ 
ly charges wholesale cus¬ 
tomers. Essentially, PG&E 
bought the power in Newark 
and sold it back—taking 
about $2 million in profit on 
the deal* 

The Modesto and Turlock 
Irrigation Districts received a 
total of about 1*5 billion 
kwh, for which they paid 
about 1.4 cents per kilowatt 
hour. The two districts re¬ 
tailed that power to their citi¬ 
zens—at enviously low 
rates—and still made about 
SI6 million between them, 
Far more than the $8 million 
San Francisco made off the 
entire Hetch Hetchy system 
in 1981. 

The remaining power— 
about 500 million kwh—was 
sold to industrial customers 
outside of the city* 

So if San Francisco kept all 
its own power, it could pro¬ 


vide close to 60% of the city's 
needs* 

The Hunter’s Point plant 
produced 1.8 billion kwh in 
1981; the Potrero plant about 
1.4 billion kwh, Together 
with Hetch Hetchy, the city 
would have a generating cap¬ 
acity of about 5.4 billion 
kwh—1*8 billion more than 
we need. The rest could be 
sold. 

More false claims 
byPG&E 

PG&E is fond of making 
claims about how much 
municipal ownership would 
cost the city* The plan would 
add 1,200 employees to the 
city payroll; it would “de¬ 
prive the city of millions of 
dollars” in lost tax revenue, 
PG&E says. 

But watch those claims 
carefully: San Franciscans al¬ 
ready pay the salaries of 
1,200 PG&E employees. 
They're included in your 
electric rates—just like they 
would be if the city owned its 
own system. And so are 
PG&E’s taxes, which are in 
effect already paid by its cus¬ 
tomers in the form of higher 
rates. 

Just about everyone in the 
city is concerned about spi¬ 
ralling electric rates* In the 
final analysis, however, those 
will not come down unless the 
city begins to use its own 
cheap electric power the way 
it was meant to be used—to 
benefit the citizens* The 
Raker Act scandal is 70 years 
old, but as long as PG&E and 
its City Hall allies continue to 
defy the law and up the rates, 
the scandal will never die* ■ 


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13 


THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 




























THE SAN FRANCISCO BAY GUARD IAN. OCTOBERS, 1982 


THE BAY GUARDIAN VS. PG&E — THE 16 YEARS’ WAR 


Who owns PG&E: 







start with the Rothschilds of 
France and England 





BY E. J. FLYNN 


‘ ‘PG&E is an example of public ownership in the 
truest sense. 

(From the PG&E flyer, “Who Owns PG&E”) 

PLn July of 1982, PG&E issued a flyer pur- 
fj porting to show that the utility’s stock is 
held by a vast cross-section of the popu- 
lation — folks just like you and me — 
most of whom live right around here. 

Shareholders, PG&E proudly proclaims, 
“are people from all walks of life . . . More 
than half of the company’s 397,010 stockhold¬ 
er accounts are held by individuals living in the 
company’s service territory, or by institutions 
located there.” That’s a lot of land, stretching 
from Eureka to San Luis Obispo. These “local 
investors,” the company goes on to say, own 
“approximately 84 million shares of PG&E 


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stock,” and no individual owns more than one- 
tenth of one percent of outstanding stock. 

From PG&E’s account, one might conclude that the 
company is living proof of economic democracy in ac¬ 
tion. Yet dose examination of the document and its 
claims about “public ownership/* plus a Guardian in¬ 
quiry into who owns PG&E, reveal that significant power 
is in fact concentrated in a relatively small number of 
powerful private corporations, mostly out-of-state. This 
conclusion undercuts PG&E’s “public ownership’* 
claims and illustrates an essential difference between pri¬ 
vate and public utilities — ultimate ownership and 
control. 


In the first place, PG&E 
points to a large number of 
Individual local stockholders, 
but it fails to add that their S4 
million shares amount to only 
45% of the 185 million shares 
outstanding. Moreover, the 
focus on the individual share¬ 
holders is irrelevant anyway, 
since none of them control 
more than one-tenth of one 
percent of the stock and their 
leverage over company policy 
is negligible. 

The true controlling inter¬ 
est in PG&E is held by a group 
of stockholders listed, innoc¬ 
uously enough, in the com* 


pany’s stockholder profile as 
“nominees.” Credited with a 
whopping 40*9% of the stock, 
nominees are large holding 
companies, made up mostly 
of banks and investment 
houses, that serve as umbrel¬ 
la mechanisms for major in¬ 
vestors* They benefit their 
participants by allowing them 
to buy and sell stock secretly 
and cloak their identities with 
harmless and misleading 
names like Cede, Kray and 
Ellen, as PG&E lists some of 
them in its PUC disclosure, 
(see chart). 

PG&E maintains in its fly- 


Calistoga’s only i 

Vegetarian Health Spa 

3 Day—2 Night Vacation 

Hot Mineral Water, Sunshine, Gourmet Meals 


Your Vocation includes: 

•Two Nights Lodging 
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• Hot Mineral Baths to Soothe You 
•Sauna & Swim to Stimulate You 
•PoJarEnergettcs Exercise Class 
•One Alive Polarity Body Session 

Additional Services (ala carte) 
•Skin Glow Rubs ($12) 

•European Facials (S16.50—S20) 
•Lymph & Cellulite Massage ($25) 

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(707) 942-4636 I 

n ■ m m m ■ 



er that no single individual 
owns more than one-tenth of 
one percent of the stock, but 
significantly makes no such 
claim for the participants in 
the nominee accounts. 

The point is that, as the ac¬ 
companying chart clearly 
shows, corporate investors 
hold significantly larger 
chunks of stock, and, conse¬ 
quently, wield significantly 
greater power over the com¬ 
pany* 

PG&E’s largest stockhold¬ 
er by far is the Rothschild 
Family Group of France and 
England which, through its 
Bank of California subsidiary, 
controls 6*3% of all outstand¬ 
ing shares. Bank Cal, 31.8% 
of which is owned by the 
Rothschilds, has an even more 
commanding percentage — 
13.1% — when common stock 
alone is taken into account, 
according to the “Spectrum” 
research guide. 

The Bank of California 
manages its interest as trus¬ 
tee for some 22,000 PG&E 
employees who are partici¬ 
pants in the utility’s Savings 
Fund Plan* However, accord¬ 
ing to several knowledgeable 
sources, the bank still has 
authority over how the stock 
is voted* For example, a re¬ 
port issued in 1968 by the U*S. 
House Sub-Committee on 


Domestic Finance called at¬ 
tention to “a definite trend 
toward bank trust depart¬ 
ments obtaining discretion¬ 
ary investment authority over 
a larger and larger proportion 
of trust department assets.” 

As William Bennett, mem¬ 
ber of the State Board of 
Equalization and long-time 
PG&E observer, put it to the 
Guardian, “What are the 
chances of PG&E’s meter 
readers and other employees 
getting together, hiring a law¬ 
yer, and successfully challeng¬ 
ing the trustee? They’ve got 
no power at all*” 

We asked the Bank of Cal¬ 
ifornia if PG&E employees 
ever voted any of the stock 
in their Savings Fund Plan* 
Spokeswoman Joelle Yuna 
told the Guardian that “be¬ 
cause of our responsibilities 
as fiduciary, we have to main¬ 
tain a confidential relation¬ 
ship with our clients. We can’t 
discuss how the stock is voted * ” 

Many experts in the finan¬ 
cial world, including former 
Federal Reserve Board Chair¬ 
man Arthur Bums and the 
late Rep. Wright Patman, 
(D*Texas), have long main¬ 
tained that 5% controlled by 
a single entity is a sufficient 
holding to guarantee consid¬ 
erable leverage over a com¬ 
pany’s policies. BankCaFs 


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THE BAY GUARDIAN VS. PG&E - THE 16 YEARS’ WAR 



holdings of 6*3%—more than 
10 million shares™therefore 
constitute a powerful power 
base many hundreds of times 
greater than the holdings of 
PG&E’s “people from all 


walks of life.” 

The control of such a large 
block of outstanding shares is 
reflected on PG&E’s board 
of directors. Bank of Cali¬ 
fornia — with its 6.3% hold* 


WHO OWNS PG&E: 

A lot of big out-of-state stockholders 

A. PG&E’s top lO stockholders 

fas reported by PG&E to thePUC, December 1981) 


1. Cede & Co., NY' 21.7% 

2. Safund&Co.,SF 7.7% 

3. Pacific & Co., SF 2.9% 

4. PG&E(agentfordividend 

reinvestment plan, SF) 2.5% 

5. Kray & Co., Chi. 1.4% 

6. Ellen & Co., SF .86% 

7. CreditSuisse .49% 

8. Societe de Banque Suisse .40% 

9. Merrill Lynch, NY .32% 

10. NY Life .27% 


B. PG&E’s top 14 stockholders 

(as reported by Corporate Data Exchange in New York City) 


1. Rothschild Family Group of France 

and England, Bank of California* 6.3 % 3 

2. TIAA-CREF* .67% 

3. First National Boston Corp. .62% 

4. Kirby Family Group, Allegheny Corp., NY ,54% 

5. Wells Fargo, SF .52% 

6. Prudential Insurance Co., Newark, N.J. .42% 

7. Univ. of California .38% 

8. J.P. Morgan & Co., Inc., NY .37% 

9. Republic of Texas Corp. .32% 

10. Connecticut General Insurance Corp. .29% 

11. Calif. Public Employees&Teachers 

Retirement Sys. .28% 

12. Crocker National Corp. .27% 

13. Manufacturers HanoverCorp. .25% 

14. Security Pacific Corp. .22% 


1, PG&E p s list includes the names of nominee accounts, 
which disguise the identities of real stockholders* Compare 
PG&E’s "mystery” list with the CDE list. 

2* Trustee of PG&E Savings Fund Plan for employees, con¬ 
trolled by the Bank of CanfomiayRothschitd interests. See CDE 
chart and story. 

3* "Spectrum” research guide reports the Bank of Cali- 
fornia/Bothschild holdings of common stock alone at 13*1 %* 
or 17,033,800 shares valued at $404,653,000 as of June 30,1982. 

4, College Retirement Equities Fund/Teachers Ins. and 
Annuity Assn. 



ing — has two directors on 
PG&E’s board: Charles de 
Brettevilie, former BankCal 
chairman of the board, and 
Alfred Eames Jr., BankCal 
director. 

Second to the Bank of Cal¬ 
ifornia in PG&E holdings — 
with a percentage only one- 
tenth as big, though still far 
larger than PG&E’s “individ¬ 
ual investors”—is the Col¬ 
lege Retirement Equities Fund 
with .67%* Rounding out the 
top five investors are First 
National Boston Corp* 
(.62%), Kirby Family Group 
of N*Y. (.54%), and Wells 
Fargo (.52%), As befits its 
rank on the investor line-up, 
Wells Fargo has two directors 
on PG&E’s board, as does 
Crocker National (#12)* 

The Guardian’s investiga¬ 
tion into PG&E’s major stock¬ 
holders provides a telling con¬ 
trast to the company’s boast 
that most of its investors are 
little people from its Nor¬ 
thern California service terri¬ 
tory* Of the ten biggest stock¬ 
holders, one — the Roths¬ 
child Family Group — is head¬ 
quartered outside of the coun¬ 
try, and six others are from 
out-of-state: First National 
Boston Corp., Kirby Family 
Group of N*Y*, Prudential 
Insurance Co*, J.P. Morgan 
& Co*, Republic of Texas 
Corp. and Connecticut Gen¬ 
eral 1 n surance Corp. 

To make the point even 
plainer, 152 large corpora¬ 
tions, as of June 30, 1982, 
controlled 38*26 million 
shares of PG&E common 
stock valued at $908 million 
— or a whopping 29*5% of 
PG&E’s outstanding stock, 
according to “Spectrum.” 
Most of these companies are 
large out-of-state-banks, in¬ 
surance companies and finan¬ 
cial concerns. Only a handful 
or so are in PG&E’s service 
area* 

Look through the accom¬ 
panying charts and the “Spec¬ 
trum” list of 152 companies 
and judge for yourself* Do 
these look like just plain 
folks, “people from all walks 


The power of the 
PG&E power trust 

How PG&E keeps its influence over 
the politics, business and media of 
San Francisco 


BY E* J* FLYNN AND 
BRUCE B. B R U G M A N N 

P G&E exercises enormous power and 
leverage over local San Francisco 
politics and business, as the Guard¬ 
ian has demonstrated in many stories 
throughout the years. 

The most obvious example of PG&E’s awesome dis¬ 
play of power is how the company has managed to stifle 
for decades virtually aU major political, business and 
media opposition to the PG&E/City Hall/Raker Act 
scandal, even though one would suppose that hard-head¬ 
ed businessmen in these quarters would see the merits of 
cashing in on our Hatch Hetchy investment and getting 
the cheaper rates and lower taxes and general fund sub¬ 
sidies that would come from bringing our own Hetch 
Hetchy power to our own people* To put things even 
more simply, it would be much cheaper to do business 
and to live in San Francisco if the city had cheap public 
power and wasn’t forced to buy PG&E’s ever more ex¬ 
pensive private power* Here are but a few of the ways 
PG&E exercises political clout in San Francisco: 

PG&E interlocks with the tors listed in PG&E’s 1981 
big banks: Of the 20 direc- annual report, six are direc¬ 


tors or former directors of 
three powerful local banks 
with major PG&E stock¬ 
holdings* Bank of Cali¬ 
fornia: Charles de Bretteville 
(former COB) and Alfred 
W* Eames Jr. (director)* 
Wells Fargo: Richard P. 
Cooley (board chairman) 
and Wilson Riles (director)* 
Crocker: John B. M* Place 
(board chairman) and Em¬ 
met! G. Solomon {former 
board chairman). Bank of 
America, Security Pacific 
and others have major 
holdings* 

This bank/utility alliance 
is as old as the electric power 
business in the U.S* and 
congressional investigations 
during the 1930s con¬ 
clusively demonstrated its 
existence and political 
power* In the 1920s in Cali¬ 
fornia, this alliance blocked 
the state from passing the 

con tin ued next page 


of life” in San Francisco or 
anywhere else in Northern 
California? 

Well, look at it this way. 
The Bank of California PR 
people say that the Baron de 
Rothschild, head of the Roths¬ 
child Family Group, will be in 
San Francisco at year’s end 
for BankCaTs annual stock¬ 
holders meeting* If he’s just 
“plain folks” like you and me, 
maybe you could ask him to 
drop by for a glass of Stone- 
gate Chardonnay and a chat 
about PG&E. 

In any event, we hope you 
have better luck in reaching 
the Baron than we did here at 
the Guardian. Alan Kay, our 
managing editor, was plan¬ 
ning to be in Paris during Sep¬ 
tember and so he tried, 
through the Bank of Califor¬ 
nia in San Francisco, and 
again through the Rothschild 
interests in Paris, to locate 
the Baron and line up an in¬ 
terview with him to get his 
views on the Bank of Califor¬ 
nia, PG&E, the Raker Act 
and Prop. K. 

No word from Alan Kay or 
the Baron by presstime at 6 
p.m. on Tuesday, Oct. 5,1982. 


P.S. /: Invaluable data on 


PG&E’s top stockholders was 
supplied to the Guardian by two 
research firms: Corporate Data 
Exchange and Computer Direc¬ 
tions Advisors, Inc. CDE is a non¬ 
profit organization that special¬ 
izes in producing corporate pro¬ 
files for congressional commit¬ 
tees, labor unions, the press, and 
anyone else interested. Its address: 
Room 707, 198 Broadway, New 
York, NY 10038. Computer Di¬ 
rect ion s pu bl i sh es ‘ * Sp ect rum, *’ 
a quarterly survey of the princi¬ 
pal holders of common stock in 
major corporations. Its address: 
11501 Georgia Avenue, Silver 
Spring, MD 20902. “Spectrum” 
is available locally in the Stanford 
Library* 

P.5. 2; The list from “Spec¬ 
trum” of the top 152 holders that 
control 29.5^0 of PG&E stock. 
See many locals? 

Aetna Life & Casualty; Allegheny 
Corp.: American FI etc her National 
Bank; American General Corp,; Ameri¬ 
can NaH BST, Chicago; American Se¬ 
curity Bank; AT&T; Amerilrust; Andre* 
Com Corp.; Atlanta Capital; BE A. Asso¬ 
ciates; David L BaOson & Co.; Bank- 
America; Bank of Catilornia; Bank ol 
Delaware; Bank of New York; Bank of 
Tokyo; Bankers Trust; Barrow Hanley; 
Batterymarch; Baybanks, Inc,; 
Bernhard & Co.; Bernstein £ Co.; Boat¬ 
men’s Banks hares: Boston Co.; Brown. 
Broihers Harr imam; CG Investment; 
CMB Investment; Calif. Public Employ¬ 
ees: Centerre Bank; Centran Corp,; 
Chase Manhattan; Chemical New York; 
Citicorp: Citizens Fidelity; Citizens and 
Sou I hem Ga,; City trust: College Re¬ 
tirement. 

Colonial Management; Colorado Na¬ 
tional Bank; Combined Insurance Co.; 


Connecticut Bank: Continental Corp.; 
Continental Illinois; Crocker National; 
Crum & Forster; Deere & Co.; Dean 
Witter; Detroit Bank; Dodge & Cox; Drey¬ 
fus Management; Eaton & Howard 
Vance: Endowment Mgmi.; Equitable 
Lite; Exxon; FMR Corp.; Fiduciary Trust 
Of New York; Fifth Third Bank; Financial 
General: First Alabama; First American; 
First Atlanta; First Bank: First Chicago; 
First interstate; First Kentucky; First 
Maryland; First National Bank of Akron; 
First National Boston; First Fennsyl 
vania; First Trust of Si. Paul: Flagship; 
Girard Bank. 

John Hancock Mutual; Harris Trust; 
Hong Kong Banking; Horizon Bancorp.; 
E.F. Hutton; imperial Chemical; Indiana 
National Bank; Ihterfirst Corp,; Invest¬ 
ment Advisors; Irving Bank; Jefferson 
Pilot; Landmark Union Trust; Liberty 
National; Lieber & Co.; Lincoln First: 
Lincoln National; Lloyds Bank of Cali¬ 
fornia; LoomisSayles; Lord Abbett; A.P. 
Loring; Manufacturers Hanover Manu¬ 
facturers National; Marine Trust; Mary 
land State Retirement; McCullough & 
Andrews; Me Morgan & Co.; Mercantile 
Bankshares; Mercantile Bank. 

Merrill Lynch; Metropolitan Lite; 
Miami Corp,; Michigan National Bank; 
Miller Anderson; J, P Morgan; Morgan 
Stanley; Mutual Life; National City 
Bank; Northern Trust; Northwest Na 
1 1 anal Bank; Northwestern Mutual Life; 
Northwestern Union Trust; Oppen- 
heimer & Co.; People's National Bank; 
Pittsburgh National Bank; Prudential 
insurance; RNC; Rainier Bancorp.; Re¬ 
public Bank; Rhode island Hospital; 
Riggs National Bank; Russell Frank Co.; 
Schroder Capital; Sc udder Stevens; 
Sears Bank; Security Pacific; Shawmul 
Corp.; Shields Asset: Smith Barney, 
Southeast Banking: Sperry Capital; 
Slate National of Illinois; State Street 
Boston Corp,; Sun Banks of Florida; 
Swiss Reinsurance; Third National of 
Hampden: Title Insurance; Travelers 
Corp,; Union Bank of California; Union 
Trust; Union Trust of Connecticut; U.S, 
Bancorp.; United Slates Trust; Univer* 
sityof California; valley National ol Ari¬ 
zona; Vi rgi nia Na (ional Ba nk; Wac hovla; 
Wall Patterson; Weiss Peck & Greer; 
We 11$ Fargo. 


15 


THE SAN FRANCISCO BAY GUARDIAN, OCTOBERS, 1982 














THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 


THE BAY GUARDIAN VS. PG&E - THE 16 YEARS 1 WAR 


continued from previous page 
Water and Power Act, an 
initiative measure that would 
have had the state develop 
water and power under an 
authority that would have 
supplied bulk power to 
municipalities and would 
have provided low-interest 
loans to municipalities to 
acquire distribution facili¬ 
ties. 

The Guardian ran smack 
into an example of this 
PG&E/BofA alliance in 
1971 when Marvin E. Car¬ 
doza and Louis A. Petri, a B 
of A vice-president and 
board member respectively, 
led the fight on the PUC to 
kill the PUCs own cost-and- 
feasibtlity study on buying 
out PG&E, which the PUC 
had adopted at the Guard¬ 
ian’s prodding. 

Then there’s the illumina- 
ting case of M. Brock Weir, 
the president of the Bank of 
California, which then and 
now is PG&E’s largest stock¬ 
holder. Weir was brought to 
Cleveland in 1973 from his 
BankCai post to become chief 
executive officer of the Cleve¬ 
land Trust Company. He or¬ 
chestrated the unsuccessful 
bank/private utility cam- 
paign of 1978-79 to take 
over the publicly owned 
Cleveland Municipal Light. 
He was the man who held 
the gun to then Mayor 
Dennis Kucinich’s head and 
said the banks would bail 
out the city only if the mayor 
did as he was told and al¬ 
lowed Muny Light to be 
stolen quietly by Cleveland 
Electric Illuminating Co, ac¬ 
cording to news accounts. 


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(Weir’s bank held most of 
the city’s short-term notes). 

In other words, Brock 
Weir of FG&E/Bank of 
California tried to pull off 
for the bank/utility alliance in 
Cleveland what they had 
done so successfully here in 
keeping Hetch Hetchy 
power out of San Francisco 
for decades. Weir and the 
bank/utility alliance were 
not as successful in Cleveland 
as they’d been in San Fran¬ 
cisco. They were beaten by a 
2-1 margin in a 1979 elec¬ 
tion. (See 'The lessons of 
Cleveland,” 3/22/79.) 

PG&E interlocks with San 
Francisco ’$ four most influ - 
enfial business organiza¬ 
tions: SF Chamber of Com¬ 
merce (PG&E president 
Barton W. Schackelford is 
the chamber’s vice-president 
for economic development.) 
Downtown Association (SF 
Division Manager J.A. Fair- 
child sits on the association 
board). Bay Area Council 
(Chairman Frederick W. 
Mielke, Jr., is a director). 
San Francisco Planning and 
Urban Renewal Association 
(SPUR) (John Koehn, vice- 
president for governmental 
relations, is a board mem¬ 
ber). Ever hear anybody 
from any of these groups 
publicly dropping a good 
word for enforcing the 
Raker Act? 

PG&E interlocks with 
many of the city's most pow¬ 
erful corporations. Home- 
stake Mining Company 
(Board Chairman Harry M. 
Conger is a PG&E director). 
Fireman’s Fund (Board 
Chairman Myron De Bain is 


a PG&E director). Del 
Monte (former Board chair¬ 
man Alfred W. Eames Jr. is 
a PG&E and a Bank/Cal 
director). Safeway (Board 
Chairman Peter A. 
Magowan is a PG&E direc¬ 
tor). Potlatch (Board Chair¬ 
man Richard B. Madden is a 
PG&E director). Potlatch 
and PG&E have another fi¬ 
nancial interest in common: 
they both quietly con¬ 
tributed large sums of 
money to Sup. Robert Men¬ 
delsohn which Mendelsohn 
didn’t properly report on his 
campaign disclosure state¬ 
ments and which ulti¬ 
mately brought political cor¬ 
ruption charges against him 
by the California Fair Poli¬ 
tical Practices Commission. 
(See PG&E chronology, 
1971-73-77-78.) 

PG&E scares hell out of 
heal poll tici a ns fro m 
mayors on up and down . 
State Sen. Milton Marks de¬ 
bated the Raker Act scandal 
in high school, but to this 
day ducks the issue in public 
pronouncements. Rep. Phil 
Burton, a member of the 
House Committee that 
supervises Interior, who in 
1979 gave the feasibility issue 
a strong endorsement, is 
ducking the issue this time 
around. So is Assembly 
Speaker Willie Brown, who 
endorsed strongly in 1979. 
So is Sup. Richard Hon- 
gisto, who once was for en¬ 
forcing the Raker Act. So 
are Bill Maher and Ben 
Tom, both of whom ought 
to know better in running as 
progressive candidates. 

One phone call—PG&E’s 



Fred Mielke Jr. to Mayor 
Feinstein—and she is doing 
without blushing a pro- 
PG&E ballot argument and 
heading up as honorary co¬ 
chair, with Sup. Quentin 
Kopp, PG&E’s front com¬ 
mittee. Kopp? The big 
rough-and-tumble fiscal 
conservative? Yup. He’s out 
there with a pro-PG&E bal¬ 
lot argument, along with 
Sup. John Molinari, and 
their points read as if they’re 
cranked out on the PG&E 
mimeograph. 

Then there’s PUC czar 
Dick Sklar, who floats out 
he’s a bit of a socialist (or at 
least a DSA member), and 
he’s reversed his position 
from 1979. Then there’s Big 
Labor on the PG&E list (SF 
Labor Council and COPE, 
Stan Smith’s Building and 
Trades Council, an ILWU 
group). Have they already 
forgotten the Tom Mooney 
case and PG&E’s direct in¬ 
volvement in framing him? 
(See Curt Gentry’s book 
Frameup for details.) 

PG&E’s Joe Kelly, Gov. 
Jerry Brown’s brother-in- 
law, marched right into City 
Hall and recruited the troops 
and wired the ballot to kill 
Prop, K at the outset—and 
not a peep of protest from 
anybody, in fact help and 
coverup from Feinstein, the. 
city attorney, city controller, 
Superior Court Judge Stuart 
Poliak. Neat. 

PG&E supports the Ex/ 
Chron and vice versa: 
Monopoly supports monop¬ 
oly in San Francisco. Still a 
blackout on the PG&E/ 
Raker Act scandal. ■ 


‘Prison bells 


BY MICHAEL E. MILLER 


pKt was back in the foggy days of 1972 or 
f f 1973, when Joe Alioto was mayor and 
fJL the cable cars ran once in a while, that 
I first learned the true and amazing 
saga of the PG&E/Raker Act scandal from 
the juicy, indignant stories of Peter Petrakis 
in this newspaper. I was astonished to dis¬ 
cover how the bosses of city hall had run in¬ 
terference for our local electricity monopoly 
for 60 years, flouting a federal law, defying a 
U.S. Supreme Court decision and barring the 
people of San Francisco from access to our 
own public power. Every citizen’s duty, 
clearly, was to try to fight city hall over this 
ripoff—but how? 


Around this time I saw a flier on my neighborhood 
telephone pole announcing an action at a coming Board 
of Supervisors meeting at city hali. Some folks were 
planning a citizens’ arrest of all eleven supes for failing 
to enforce the Raker Act, which requires the city to own 
the town’s electrical distribution system. This was 
something I couldn’t miss. 


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A couple of hundred of 
my fellow concerned citizens 
showed up, though we 
didn’t manage to arrest any 
supes. Some of those wor¬ 
thies, including Dianne Fein¬ 
stein, even seemed to think 
we were the ones who should 
be arrested. At any rate, the 
group’s leadership decided 
to march the crowd out of 
the chambers chanting slo¬ 
gans exposing the legislators’ 
lawlessness. The two I re¬ 
member are “San Quen- 



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16 







































THE BAY GUARDIAN V$. PGM — THE 16 YEARS’ WAR 



soon be ringin’ 

The PG&E scandal and me 


tin's the next stop/For 
Supervisor Quentin Kopp” 
and “Prison bells will soon 
be ringmVFor Dorothy von 
Berokiingen.” 

How I became 
a PG&E stockholder 

It was several years later 
that I became a PG&E 
stockholder, I was a Guard¬ 
ian editor by this time and 
happened to get a call at 
home one evening from a 
stockbroker who wanted to 
sell me some shares of a new 
issue of PG&E preferred 
stock. It’s a solid company, 
he assured me. I agreed it 
was a solid company and 
said I would take one share. 

It cost me about $25, as I 
recall, but now I get a divi¬ 
dend check for 64C every 
three months, which works 
out to about a 10% return 
on my capital* The manage¬ 
ment several times has of¬ 
fered me the chance to rein¬ 
vest my dividends toward 
more stock, but I like the se¬ 
curity of getting that check 
in the mail. 

With each check I get a 
nice quarterly report, which 
usually has some cheerful 
woids about the improved 
outlook for getting Diablo 
Canyon on line one of these 


days, or a call to arms when¬ 
ever the U.S. Congress or 
the California Public Util- 
'ities Commission is jeopard¬ 
izing the stockholders’ well- 
being by threatening to in¬ 
terfere with our company’s 
profitability. 

I also get the annual re¬ 
port, which contains more 
of the same and has color 
photos to boot. Last year’s 
edition had the most vibrant 
photographs I have ever seen 
reproduced anywhere—shots 
of Diablo and the like, as 
palpable as a Viewmaster 
slide, representing a break¬ 
through in color printing, 
I’m sure—and it alone was 
worth the price of a share. 

On top of all this, I get to 
cast my proxy vote in favor 
of the dissident stock¬ 
holders’ resolutions that 
somehow make it onto the 
ballot, such as the proposal 
last year to convert the 
Diablo plant to wind or solar 
generation. Another propo¬ 
sition last year would have 
barred the company from 
proceeding on Diablo until it 
knew what to do with the 
radioactive wastes. The 
company’s management re¬ 
sponds at length on all these 
things. Their response to the 

continued next page 



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THE SAN FRANCISCO BAY GUARDIAN, OCTOBER 6,1982 


THE KAY GUARDIAN VS. PGM — THE 16 YEARS* WAR 


continued from previous page 
waste problem was basically 
that federal law required the 
government to take care of 
nuclear wastes. So don't 
look at us, the company said 
in effect. (Now there's a fed¬ 
eral law PG&E likes!) Every¬ 
body who can possibly spare 
the money should buy a 
share of PG&E. 

Three public servants 
vote 

the public interest! 

Early in 1979 I found my¬ 
self back in the supervisors* 
chambers at city hall, this 
time reporting on the hear¬ 
ings of a supes* committee. 
The panel was considering 
Carol Ruth Silver's call for a 
feasibility study on munici¬ 
palizing the city's electrical 
system. By now the Raker 
Act was going on 70 years 


old, and this was the furthest 
any proposal to enforce it 
had gotten in living memory. 

PG&E was kind enough 
to send me a notice of the 
hearing. It began, “Dear 
San Francisco stockholder,** 
and painted an alarming pic¬ 
ture of this latest threat to 
our investment. Dozens, 
maybe hundreds, of my fel¬ 
low stockholders packed the 
chambers. Most of them ap¬ 
peared to be members of the 
retired community, who had 
the time to spend a Tuesday 
afternoon at city hall. 

On the committee was 
Quentin Kopp, a lawyer with 
no visible affinity for the 
federal Raker Act. Another 
member was Harry Britt, a 
consistent advocate of law- 
and-order on this issue. The 
chairman was Lee Dolson, 
who scheduled a quickie 
hearing that aced out many 




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public power supporters 
from testifying, then dis¬ 
qualified himself from fur¬ 
ther action (such as resched¬ 
uling the hearing at the re¬ 
quest of the proponents) on 
conflict-of-interest grounds 
after the Guardian reported 
he owned 400 shares of 
PG&E stock. 

So the hearing came down 
to Kopp and Britt, As chair* 
for-a-day, Kopp gleefully 
browbeat the public power 
witnesses and encouraged 
the PG&E cheering squad 
and the company's well- 
spoken lawyer. But in the 
end, he went along with 
Britt*s motion to hold 
another hearing a month 
later, which gave some pub¬ 
lic power people a chance to 
speak in favor of the radical 
notion of enforcing federal 
law in San Francisco. 

This issue eventually got 
to the full board, where 
three supervisors—Silver, 
Britt and Gordon Lau—ac¬ 
tually voted in favor of a 
feasibility study. The specter 
of three supervisors voting 
the public interest on this is¬ 
sue would not have been re¬ 
motely imaginable at the 
time of the contemplated 
citizens 1 arrests just a few 
years earlier . 

Among those who voted 
for PG&E was John Moli- 
nari, who on the campaign 
trail the previous fall had sat 
in a chair not five feet away 
from me in the Guardian of¬ 
fice and said he would vote 
in favor of up to $500,000 
for a feasibility study. Dol¬ 
son ducked the vote, though 
he later told a public meet¬ 
ing, while he was seeking 
votes, that he would like to 
support a feasibility study— 
it was just that he wasn't al¬ 
lowed to get involved in 
PG&E-related issues because 
of his stock ownership. Still, 
he made no move to sell his 
stock and remove this oner¬ 
ous restriction. 

The Guardian endorsed 
Kopp for mayor that fall 
anyway, which proved we 
didn't hold a grudge. Be¬ 
sides, his chief opponent, 
Dianne Feinstein, has always 
been as hostile to the Raker 
Act as anyone in city hall. 

Till death do us part 

Right after Dianne and 
Richard Blum were married, 
they stopped by the Wash¬ 


ington office of then Secre¬ 
tary of the Interior Cecil An¬ 
drus, mentor of PG&E's all- 
time favorite supervisor, 
Bob Mendelsohn, as well as 
the man in charge of enforc¬ 
ing the Raker Act. Andrus 
told the honeymooners he 
had a wedding present for 
the bride: he was going to 
withdraw the federal govern¬ 
ment's longstanding objec¬ 
tion to letting San Francisco 
gouge the city’s out-of-town 
electricity customers with 
PG&E rates. 

Some background: Since 
PG&E's allies at city hall 
have never allowed the city's 
Hetch Hetchv-generated 
hydropower to enter the city 
as cheap public power for 
the residents, as the law re¬ 
quires, they have found it 
convenient to sell some of 
the juice to folks between 
here and Yosemite. Among 
the takers have been the 
Turlock and Modesto irriga¬ 
tion districts, which dis¬ 
tribute power to those Cen¬ 
tral Valley communities. 
Much to Feinstein's regret, 
the city had long-term con¬ 
tracts with these customers. 


• FG&E has abandoned 
its long-standing claim that 
Diablo will have no effect on 
electric bills. Company spokes- 


with rates fixed for some 
time into the future. 

When electric rates started 
to skyrocket in the 1970s, 
the city bosses decided city 
hall ought to be able to 
charge the same stratospheric 
prices as PG&E. But the feds 
sided with the out-of-town 
power customers, pointing 
out that hydropower was not 
gening any more expensive 
to produce, since it was es¬ 
sentially free. 

Andrus' wedding present 
to Dianne was less appropri¬ 
ate for her marriage to Dick 
than for her more venerable 
union with PG&E. To allow 
the city to charge PG&E 
rates for Hetch Hetchy 
power is to remove the 
“yardstick” of public pow¬ 
er, jhe everyday true-life ex¬ 
ample of what San Fran¬ 
ciscans should really be pay¬ 
ing for electricity. 

Another effect of this fed¬ 
eral action might be to in¬ 
spire the Modesto and Tur¬ 
lock districts to proceed with 
a hoary scheme to dam the 
Tuolumne River, destroying 
one of the most majestic 
wild river canyons on earth. 


men now tacitly admit the 
promised fuel savings from 
Diablo may not materialize. 
In an abrupt change of posi- 


The purpose of these new 
dams would not even be to 
provide for basic electric 
needs, but to create addi¬ 
tional “peaking power” on 
sweltering summer after¬ 
noons. in short, the hidden 
objective of this ruinous 
project is to provide cheap 
air conditioning for 
Modesto and environs. 

San Francisco was a 
major partner in this project 
for many years, until Fem- 
stein dealt the city out late in 
her 1979 campaign. The 
Feinstein camp, desperate to 
score points against the 
dread Kopp, was casting 
about for an environmental 
issue, and the Friends of the 
River came up with this one. 

Still, much of the reason 
that the grandeur of the 
Tuolumne survives into 1982 
is that it is virtually impos¬ 
sible to get any level of gov¬ 
ernment these days to spend 
money on anything besides 
more nuclear bombs. Nu¬ 
clear wastes, of course, can 
be reprocessed into pluton¬ 
ium. Could this be the gov¬ 
ernment plan to deal with 
the effluvia of Diablo? ■ 


tion, PG&E spokesman Den¬ 
nis Pooler recently told the 
Guardian he “wouldn't spec¬ 
ulate at this point” what will 
happen to electric rates when 
the $2.5 billion plant is ad¬ 
ded to the rate base. 

• PG&E has poured such a 
vast amount of money into 
the plant that it has badly 
weakened the company's fi¬ 
nancial stability; financial 
analysts agree that if the cus¬ 
tomers don't begin to pay at 
least some of Diablo's con¬ 
struction costs soon, the giant 
utility could be in serious fi¬ 
nancial trouble, 

•PG&E still officially re¬ 
fuses to consider the possibil¬ 
ity that the plant might never 
con tinued page 20 


The Diablo Canyon 
dilemma: 

your bill goes up whether or not the 
nuclear reactor goes on line 


BY TIM REDMOND’ 

I f PG&E’s Diablo Canyon Nuclear Pow¬ 
er plant goes on line this spring as 
planned, your electric bill will go up. 

If Diablo doesn’t operate this spring 
— or any time in the near future — your elec¬ 
tric bill may go up anyway, although 
probably not as much. 

This seems to be the consensus emerging from all 
sides of the long-simmering Diablo controversy. 

A Guardian investigation into Diablo's finances and 
operating potential shows that: 



Marmot Mountain Works 

3049Adeline St., Berkeley, Ca. 849-0735 

For fine outdoor clothing & mountain equipment 


SKI SEASON 


SPECIAL EVENTS 


This season we’ll be carrying 
9 models of metal edge, 
back-country skis; and we’ll 
be renting all 9 models plus 
back-country boots and 
avalanche probe poles in 
our expanded demo 
program! 


★we' II also be offering an excellent quality 
beginner's package with Trak Traveller 
skis for around $100.00. 


SLIDESHOW 

"The Himalayas: An Outdoor Playground”, 
with Doug Scott, Wheeler Half, U.C. Berkeley 
Campus, October26, 8 P.M., $3,00admission. 

CLINICS 

“Telemark Techniques”, December8,7:30, at 
Marmot. “Trans-Sierra Ski Tour," February 1, 
7:30, at Marmot. Both clinics will be with Bela 
and Mi mi Vadaszjnountain guides and 
directors of the Alpine Ski I Is Institute, 

Lafayette, Ca. 


18 







































THE SAN FRANCISCO BA Y GUARD IAN. OCTOBER 6.1982 


THE BAY GUARDIAN VS. PG&E - THE 16 YEARS’ WAR 


Classes 

Directory- 



Clement 
Hypnotism | 
School 


Micho&l Greenberg. Ph.Q. 


CAREER 

TRAINING 

Be Your Own Boss and 
Enjoy the Rewards as a 
Professional People-Helper 

(415)777-9567 Free Brochure 


“SF’s BEST WORKOUT” 


1 ? 7 

mofinin 



aerobic dance exercise 


New Fall Schedule 


OATTIME 

Women's Bldg,, i&ihS Valencia. 
MJ.W.TKF £ Sal 9:15 fi 10:30 AM 
Harvey Milk Hec. Center. 

Scott & EJuboce, M.W 3 F B:3G AM 
•Boys Club, t950 Page (Stanyan), 
T.W.Tb.F a Sat 9:00 AM 
•InLernational Center, 50 Oak Si „ 
M.T i. ThteOO Moon 
* Jamestown Comm. Center, 23rd by 
Dolores. Sal 9:30 a 1045 AM 
•Moscone Rec, Center. Chesinut at 
Buchanan. T & Th 130 PM 
AFTER WORK 

Everett Jr. High, iTlft & Church, 
M.T.WS Th 5:00 S 7:15 PM 
Women's Bldg., IfJOv & Valencia, 
T.W 4 Th 6:00 PM 


AFTER WORK 

*Pattanghl Youth Center. Belvedere 

5 Walter, M& W6:Q0 PM 
•International Center, 50 Oak St., 

Mj.W.Th & F 5 30. T A Th 6:45 PM 
•Tstvan Haz, 1052 Geary [near Polk), 
M.T.W & Th Sm PM 
■ A.P. Gianmni, 39th & Ortega. 

M & W 6:30 PM, Sat 1030 AM 

* £L Teresa's Church, Connecticut 
ftl9lh.T&Th 5:00 PM 

•Rhythm £ Motion Studio 0 R.l,), 1133 
Mission. M & W 5:30 PM. Sun t0:00 

6 11:15 AM 

•S.F. Community School. Divi?adero S 
Beach. M l W 5:30 & 6:45 PM 

* I.O.E.S.S.T. Bldg, 511 Caledonia 
(Saus.)T&Th6:J5PM 


Introductory class Iree at these locations with thisad—oKfir expires tit 82 

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The Laughing Man Institute Presents 

A Special Program on the Spiritual Principles of True 
Healing and Conscious Dying Based on the Radical 
Wisdom of the American-born Spiritual Adept Da Free 
John. 

RADICAL HEALiMG WORKSHOP 
October 15-17 

This workshop will be co-ied by Sun Bear, a Native 
American healer and Frans Bakker, M.D., of The Rad¬ 
iant Life Clinic & Research Center. Topics include: 

* the ancient healing principles of faith, prayer & 
fasting 

* the art of laying on hands 

* traditional sweat lodge & healing ceremony 

* radical healing as taught by Da Free John 

EASY DEATH WORKSHOP 
October 23-24 

This workshop will be led by Dr. Bakker and the staff 
of the Radiant Life Clinic, and is based on Master Da 
Free John’s forthcoming book. Easy Death. Topics 
include: 

■ the esoteric anatomy of the death process 

* ultimate wisdom on death and self-transcendence 
«a unique spiritual approach to the care and 

treatment of the dead and dying 

* experiential meditation exercises 

In addition, evening lectures on Easy Death will 
be held at four Bay Area locations between Oc¬ 
tober 11 and 20. Admission: $5. 

Participants may register for the lecture, either 
one of the weekend workshops, or for the en¬ 
tire program. The cost for the entire program is 
$135. C.E.UTs will be available for licensed health 
professionals. 

For more information about the program, or to 
pre-register contact: The Laughing Man Insti¬ 
tute, 923 C Street, San Rafael, CA 94901, Phone: 
415/457-2700. 


continued from page 1$ 

operate. But Diablo’s oppo¬ 
nents think the plant is look¬ 
ing shakier every day, and the 
Public Utilities Commission 
admits that a disfunctional 
Diablo is a possibility they 
are studying. 

• In the midst of its denials, 
PG&E admits it has studied 
the legal implications of Di¬ 
ablo failing to gain Nuclear 
Regulatory Commission ap¬ 
proval, and says the company 
thinks it has sufficient legal 
grounds to force customers 
to pay for the plant whether 
it runs or not. 

•If Diablo fails to gain li¬ 
censing approval soon, both 
PG&E and plant opponents 
agree the battle will probably 
end up in the California Su¬ 
preme Court. 

For San Francisco ratepay¬ 
ers, the Diablo fiasco is an all- 
toodear example of the prob¬ 


lems inherent in giant, pri¬ 
vately-managed utilities. As a 
private corporation, PG&E’s 
main responsibility is to its 
stockholders — many of 
whom don’t even live in Cal¬ 
ifornia — not its customers. 
(See “Who owns PG&E,” 
page 14.) There is little pub¬ 
lic accountability for the com¬ 
pany's decisions, despite the 
existence of the state Public 
Utilities Commission. This is 
because, says William Ben¬ 
nett, former PUC president 
and currently a member of the 
State Board of Equalization, 
“Commissioners all tend to 
travel in the same circles as 
PG&E. They are far more 
sympathetic to corporate de¬ 
sires than customer needs.” 

Earthquakefaults 
and cost overruns 

Diablo Canyon's twin 1110- 
megawatt reactors make it 


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the largest nuclear power 
plant in California, Its prox¬ 
imity to an earthquake fault, 
design problems, and cost 
overruns have also made it 
perhaps the most hotly-con- 
tested nuclear power plant in 
the country. 

PG&E began constructing 
Diablo in 1967. Total costs 
were, estimated at $350 mil¬ 
lion. Fifteen years and some 
$2.5 billion later, it still isn't 
running — opponents vow it 
never will. 

The plant has been plagued 
with problems almost from 
the start. To date engineers 
have discovered upwards of 
125 design and construction 
flaws, the most serious of 


which is a blueprint flip that 
resulted in earthquake sup¬ 
port structures in Unit One 
bei ng instal led back wards. 

So far, PG&E — one of the 
few utilities in the United States 
to attempt to build its own 
nuclear plant — has yet to do 
any major structural repair 
work on Diablo. Company 
officials have applied for an 
operating license anyway, 
hoping the Nuclear Regula¬ 
tory Commission will allow 
the plant to operate “as is,” 
That's important to PG&E, 
since repairs would take time 
and money, and the giant 
utility is so deeply mired in 
debt over the project it might 
not want to risk sinking fur- 



A “Best by the Bay” choice in S,F, Magazine. 

An athletic aerobic workout designed to strengthen your 
heart and tone your muscles. For men and women, 
evenings and Saturdays. $3.50/class T 4/$12,8/S20,16/S35. 
Wear tennis shoes. Bring a mat. 


North Beach 
Sts, Peter & Paul gym 
665 Filbert at Columbus 
T&Th 5:45 & 7:00 pm 
Francisco Mid, Scb gym 
Annex, Francisco nr. Powell 
M&W 5:45 £ 7:00 J>m 
Telegraph HMj Rc.Clr. 

555 Chestnut at Mason 
Sat 9:30 & 10:45 sm 

The Marina 

SFComm, Setx 
Beach & Div I sad e ro Sts. 
T&TH 5:30 S 6:40 pm 


The Richmond 
Presidio M Ed, Sch, 

39th & Clement 

MSW5’45S7:00pm 

Star of the Sea lower gym 

flih Ave.nr. Clement 

Sat. 9.30 A 10:45 am 

Also Level i exercise— 

a less demanding entry- level das£ 

T&TH 5:45 S 7:00 pm 

Noe Valfey 

Alva rado Sc hool Aud. 

22nd at Douglass 
T&TH 5:455 7:00 pm 

Starts Oct. 18th 

James Lick Mid,Sch. 

25th St. S Noe 
M&W 5:45 & 7:00 pm 


call 474-1090 for brochure & schedule 



"... For those who truly hope to enter public interest law, it can provide an appealing 
alternative to the debilitating excesses of the traditional law schools. 1 * 

Frank Clancy 
Community Jobs—March 1982 

New College 
of California 
School of Law 

is now accepting applications for the class of 1983 

Including an evening division 

We are now fully accredited 
by the State Bar 

A Public Interest Law School 

(415) 863-4111, 50 Fell Street, San Francisco, 
California 94102 


20 






















































ther resources into it. 

As soon as the plant is li¬ 
censed and begins full-power 
operation, the PUC will allow 
PG&E to add it to the rate 
base (see Rates article) and 
begin recovering costs and 
making profits on the plant. 

By the time the plant is run¬ 
ning* PG&E estimates it will 
have spent $2.5 billion on it. 
If the PUC allows the entire 
construction cost into the rate 
base, customers will begin pay¬ 
ing more than $400 million a 
year for the privilege of using 


Diablo's electricity. 

The cost of Diablo to the 
ratepayers includes PG&E’s 
12.2% return — determined 
as a “fair rate of return* 1 by 
the PUC — on the entire in¬ 
vestment, plus “depreciation” 
and operating costs. 

Depreciation means the 
ratepayers not only pay for 
the “fair return” on the in¬ 
vestment PG&E made in the 
plant, but also for the plant 
itself. During Diablo’s esti¬ 
mated 30-year life span, 1 /30th 
con tinued nex t page 


A day on the bay 


Sailing Lessons $10 per hour. 
Skippered Charter for Party of Six 
$35 per hour. Also Night Sailing. 
San Francisco Location 
Marina Green Sailing 922-0227 


L 


ACUPRESSURE 


CERTIFIED TRAINING PROGRAM 

State approved training in finger pressure methods designed 
to relieve tensions. The 130 hour program includes Jin Shin. 
Shiatsu, Touch for Health. Reflexology, pulse reading. Anatomy 
and Physiology. Two additional workshop locations: 

San Francisco • Walnut Creek 


V 

CALL FOR FREE BROCHURE (415) 845-1059 
ACUPRESSURE WORKSHOP * 1533 Shajluck Avenue * Berkeley, CA 94709 

EsraNuhed m 1976 


Michael Reed Gach. Director 


COME RUN WITH US 




On going running classes for 
Beginners (Level I] and for those 
who want to further develop their 
running program (Level II), 

* Learn from an instructor who knows 
how to pace your running progress 

* Gain confidence in a small group of 
women who share your goals. 

New Classes starting the week of October 18th 
Wo n't You in So n Fra nc Esco, Marin r & East Bay locations. 

For more information call: 

u *’ Kristin Johnson 932-0257_ 



Classes 

Directory' 




v/ 


Interested in Improving Your Home 
Environment or Considering a Career? 

• Day & Evening Classes 

* Foreign Students Accepted 

• Offering an Associated Arts 
Diploma and Bachelor of Fine Arts 

WESTERN DESIGN INSTITUTE 

1500 16th Street. San Francisco, Calif. 94103 
(415) 552-3105 

(Adjoining Showplace Square! 


The Frog Prince Conspiracy 

Invites You 

To A Special Preview Event For: 

& 



A Weekend Workshop/Celebration 
About Men For Women And Men 


Come to one of the foflowing events at no charge! 


THURS., OCT. 7, 8:00 p.m. 

Fori MiI'mui Conference Center 
Bldji- C, Rnum 2G() 

Lagmi & M.ntiv BlviL, SI .. L \ 


SUN., NOV, 7, R:Q0 p.m, 
Ala ram Center 
S.iiisilittj, CA 
(Lull liti dirvuiorfe) 



For more Information, contact 

The Pros Prince Conspiracy 

[41S) 652-4452 


[U1 

LnJ 


ru 


Dr Freda Morris, director 

Author ot 

Sett--Hypnosis In Two Da vs ana 
Hypnosts Wstn Frtends and Lovers 

Hypnosis Ctearing House, Inc. 

7504 Franklin 51., Suite 303 
Oakland, CA 94*72 


(415} 457-6440 

CAREER TRAINING IN 
HYPNOSIS 

Re confident of yourself as a qualified professional 
Be competent in assisting others, to change in ways they choose. 
Be certified by the Hypnotist Examining Council of 
Californiaand registered by the American Council ot 
Hypnotist Examiners. 


Partial List of Courses 

Hypnotic Processes, Get an overview of the field ot hypnosis 
through observation, experience, practice, and dm ussion of 
trance work 

Experiencing and Practicing Self-Hypnosis, Master inner skills to 
bring about change in yourself 

Habit Modification, Change your own habits, and help others 
change theirs 

Hypnotherapy with Clients. Watch an expert work, pick out the kov 
elements m their success, and do supervised hypnotherapy with < Items 
legal and Ethical Issues in Hypnosis, Learn to be of rc*al service 
in your community while working within the law. 1 aught by 
fudge Thomas Patrick Hums 

Marketing Your Hypnotic Services, Develop the know-how and skills 
to make vour services known, valued and desired 

Complete Program; 200 Hpurs, Evenings and weekends in Berkeley near SARI, 



and the San Francisco Heart Association 
jjl invite you to 

vn 


A DANCE EXERCISE MARATHON BENEFITING THE AMERICAN HEARTH ASSOCIATION 

WhenrSaturday, October 16,1982 

Sign in: 9:00 AM DANCING: 9:30 AM-12:30 PM 

Where:USF Memorial Gym; 2335 Golden Gate Ave. (betw. Masonic & Parker) 

Who:Anyone interested in getting a good, 3-hour workout and raising money for the American Heart 
Association. Dancergetics, the co-ed Aerobic Fitness Program, is presenting a specially designed 
session for the event. You do not have to be a Dancergetics student to participate. 

How:To sign up, tiii out the registration form below. You can mail it, or bring the form to any 
Dancergetics class in S.F., or register at the door. 

PledgesfTo collect pledges, ask friends, family and associates to pledge 5C or more per minute you dance. 

Prizes are based on the amount turned in to the Heart Association office by Monday, November 1,1982 
at 5:00 p.m. Your $10.00 registration fee will be counted in your total. 

Clothing:Be sure to wear comfortable clothing and gym shoes. Bring a mat or towel. 

Registration includes T-shirts, prizes, & refreshments / 


it 



Please register me for DANCE FOR HEART, Saturday, October 16. Enclosed is my check for SI0.00 made payable to the American Heart 
Association. Dance For Heart. Registration fees are tax deductible. 

Name _ _ _ _ - _ _____ 


w 


Address . 


.City. 


-2ip. 


Daytime telephone ■ 
T-Shirt size (circle one) 


. Have you attended DancErgetics before?. 


Women's: Small Medium Large X-Large 


Men's: Small Medium Large X-Large 
__Date: _ — 


Signature: ____ _ 

In consideration of your acceptance ol this form, I hereby Id myseEl, my heirs, administrators and assigns waive and release any and all rights and claims for damages I may have against 
the sponsoring organizations or their representatives, successors, and assigns arising out ot any and all Injuries suffered by me while participating in Dance For Heart, Parent andfor 
guardian agrees to Indemnity and hold harmless the sponsoring organizations, representatives, successors and assigns for any and all da mages or Injuries received by the minor 
partial paling In Dance For Heart. 


Mail to: American Hear! Association, c/o Dance For Heart, 421 Powell Street, San Francisco, CA 94102. 
Bring to: any DancErgetics class in San Francisco 


(415)433-2273 

For More Information Call 563-7082. 


FINANCIAL DISTRICT 

n00 Slockton si Pirv 
MW&F 5 30 PM 
M6 r 30 PM T & Th 6'00 PM 

N£ttEQM£flJLk 

2340 Jackson 31 Wedstei 
T 6 00 PM & 7 U0 PM 

CLAIRE LIUEKTHAL SCHOOL 

5950 Sacramento 
Bel Arguello B Cherry 
Th 0 15 PM 

JAMESTOWN QQMM. 

CENTER 

ISO Fair Oaks at 23rd St 
MfiW 6-75 PM 

.TELEG RA P H H ILL 
NEIGHBO R HOOD CENIE B 

555 Chretnul 

bet Powell and Mason 

MK.W 6 00 PM 

UFREfLMOEJREC.JENT.B3 

Day at Sanchez 

MAW 6:00 PM Sat 10:30AM 

EttSEKA VALLEY 

RECr center 

IOO Collingweod at. V8th Si 
M W&F 6 00 PM 

CONGREGATION 

BETH.SHfl.lflM 

mi-i & Clement Si 
T&th 6 30 PM 

M ISSiQN C U LTU HA L C ENTEh 

2866 Mission at 25lh 
T & Th 5 00 PM 
COMMODORE SLO AT 

ELEM. SCHOOL 

JunrpOfO Sirrrn £ Omm 

M&W G 30 PM 

TH F DANCE STUDIO 

1223 Sutler 

bei Van Nes*. S Polk 

M W £ f ? IX) AM L t. 00 PM 

Sal 10 00 AM 

MMV 7 1 5 PM 

T & Th Noon & 6 00 PM 

SUNSET REC CENTER 

28 th and Lawton 
Miw 6 00 PM 

UC EXTENSION QTp. 

55 Laouna Kl al Haifjhi SI 
Sat 930 AM 

5L.&GNE5 GYIY 

i530PaqeS‘ at Masonic 
TSTheiS 

AVENUE BALLROOM 

603 Tataval at I6in Ave 
MJ&Ttji 7 00 PM» Sal 10:00 AM 

NA8 V E.V_ WLJS.GSiff E ft 

SO Scon ai Ottboce 
T&Th 1000 AM 

LAP ATETTE ELEM . 

Ariza at 36th Av^ 

MAW 6 30 PM 

FORT MASON CTH. 

Bldg C-Rm TOO 
M&W 5.00 PM 
Sat 1000 AM 


21 


THE SAN FRANCISCO BAY GUARD I AN, OCTOBER 6,1982 



























































































THE SAN FRANCISCO BAY GUARDIAN, OCTOBERS, 1982 


THE BAY GUARDIAN VS. PG&E — THE 16 YEARS’ WAR 


PG&E likes to say, do you want the people running the Muni to run a public power 
system in San Francisco? Perhaps it's more fitting to say, do you want the people 
who brought us the Diablo Canyon nuclear debacle, with cost overruns up to 750%, 
to run our electric system in San Francisco and make us pay for Diablo mistakes, 


continued from previous page 
of ihe original cost will be ad¬ 
ded into the rates each year. 

Diablo's operating costs 
alone may reach $100 million 
a year t PG&E says. That 
doesn't include money the cus¬ 
tomers must pay to replace any 
broken pans. It doesn't in¬ 
clude decommissioning costs 
either. No nuclear power plant 
has ever been decommissioned, 
so it is impossible at this time 
to estimate the final costs, 

PG&E maintains Diablo 
will replace the equivalent of 


20 million barrels of oil a year. 
But the company hasn't 
burned that much oil since 
1976. In 1981 PG&E burned 
9.5 million barrels; in 1982 
it expects to bum about a mil¬ 
lion, according to PG&E 
spokesman Greg Pruett, 

A total wash 

For years PG&E has con¬ 
tended that the plant wouldn't 
cost ratepayers an extra pen¬ 
ny. The plant, Pruett said, 
was supposed to be a “total 
wash”; it would allow enough 


fossil fuel to be saved that 
the reduction in fuel costs 
would just about offset the 
costs of running the plant. 

Now they’re not so sure. 

“At this point, I really 
wouldn't speculate what ef¬ 
fect the plant will have on the 
rates,** Dennis Pooler, a 
PG&E public relations repre¬ 
sentative, told the Guardian. 

In theory, replacing 20 mil¬ 
lion barrels of oil, at about 
$40 a barrel* would result in 
significant savings. But since 
PG&E has markedly slowed 
its oil consumption, switching 
instead to cheaper hydroelec¬ 
tric power and natural gas* 
it remains undear whether — 
and where — such fuel sav¬ 
ings will materialize. 

Pooler had no problem tell¬ 
ing the Guardian how much 
energy the plant would gen¬ 
erate and how much oil it 
would replace. But when 
asked to point out w'here — 
specifically — the company 
w'ould cut back on fuel costs 
to save $400 million a year, 
Pooler said he “couldn't find 
the figures.” 

“The numbers Pve been 
giving out are based on our 
figures from January, 1982,” 
the PG&E spokesman said, 
“We haven’t filed a revised 
application [with the PUC] 
yet, so 1 really can’t specu¬ 
late on the exact effect Diablo 
will have on the rates,** Pool¬ 
er said. 

Thinking the 
unthinkable 

Early in April 1982, the 
Chronicle reported that PG&E 
Chairman Fred Mielke is now 
considering plans for the com¬ 
pany’s finances in the event 
that Diablo never goes into 
ope ratio n. Officially* ho w- 
ever, PG&E's position is the 
same it’s always been: Diablo 
will operate. There is no other 
possibility. 

“The Chronicle reporter 
misquoted Mr. Mielke," Pru¬ 
ett told the Guardian. “As far 
as we*re concerned, Diablo 
not operating is totally incon¬ 
ceivable. It has to go on line, 
and no plans are being made 
for any other contingencies, ” 

However, Public Utilities 
Commission officials dispute 
the company’s iron-clad cer¬ 
tainty. PUC spokesman Gene 
Raw ley told the Guardian 
the PUC has begun research 
into the possibility of Diablo 
nor operating, although “it's 


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22 


almost impossible to say what 
would happen — there’s no 
precedent anywhere,- he said. 

Under the strictest inter* 
pretation of California law, 
PG&E would not be allowed 
to add the plant into the rate 
base — and begin to charge 
customers for construction 
costs — until it is operating 
at full power. If it never oper¬ 
ates, PG&E would have to 
take a multi-billion-dollar 
loss. Since Diablo Canyon rep¬ 
resents more than 25% of the 
company’s total assets, the 
financial impact on the utility 
would be enormous, John 
Gibbons, the PUC's chief ac¬ 
countant, told the Guardian. 

But just about everyone in¬ 
volved with the Diablo con¬ 
troversy concedes it isn't likely 
PG&E would have to shoul¬ 
der the entire financial bur¬ 
den, “My understanding of 
the law is that* if the plant 
doesn’t go into operation, 
the ratepayers won’t have to 
bear the cost," Joel Reynolds, 
an attorney for the Center for 
Law in the Public Interest, 
the Los Angeles firm that's 
handling much of the legal 
work against the plant, told 
the Guardian. “But that’s not 
to say it wouldn’t be de¬ 
sirable for all parties to work 
out some son of a settlement.” 

Reynolds also said his firm 
has seen studies indicating 
the possibility of converting 
the plant to coal or oil-burn¬ 
ing electrical generation, 
“We’re not saying it will have 
to become a museum," he 
said, 

PG&E spokesman Pruett 
said the company feels It re¬ 
ceived the PUC's blessing on 
the project 15 years ago, when 
construction was just begin¬ 
ning. “The PUC said Diablo 
was a prudent decision back 
in 1967, and we don’t fed it 
would be our responsibility 
to bear the costs [if the plant 
fails to operate],” he told the 
Guardian, 

The Commission in 1967 
issued PG&E a “Certificate of 
Public Convenience and Ne¬ 
cessity” for Diablo Canyon, 
The routine decision allowed 
PG&E to begin operation on 
the plant on the tentative as¬ 
sumption that it would be ad¬ 
mitted to the rate base when 
completed, 

Reynolds told the Guardian 
he doesn't think the 1967 cer¬ 
tificate legally protects the 
company from assuming lia¬ 


bility for the plant , “The cer¬ 
tificate didn’t require the 
company to build the plant, 
nor does it indemnify the com¬ 
pany if the plant fails," he 
said. 

If Diablo does not go into 
operation, the PUC would 
have to decide how to handle 
the complex financial respon¬ 
sibility for the plant. What¬ 
ever that decisioni however* 
both sides agree the losers al¬ 
most certainly would appeal 
the case to the California Su¬ 
preme Court, which has juris¬ 
diction over PUC disputes. 

Gibbons said the PUC 
might try to adjudicate the 
dispute by allowing PG&E to 
include in the rate base that 
portion of the plant that was 
built before new evidence — 
and cost overruns — should 
have caused the utility to re¬ 
examine its commitment to 
Diablo, 

PG&E'sfinancial 
rating drops 

The massive cost overruns 
— nearly 750% more than 
original estimates — and 
lengthy delays in operation 
have already begun to take 
their toll on PG&E’s finan¬ 
cial stability. Both Standard 
and Poor's and Moody's re¬ 
cently lowered their approval 
ratings for PG&E’s bonds and 
“commercial paper” (unse¬ 
cured corporate notes), citing 
uncertainty over the future of 
Diablo as their rationale. If 
the plant is delayed much 
longer, the heavy borrowing 
necessary to finance it may 
begin to take its loll as PG&E 
is forced to pay off the inter¬ 
est on its loans out of earnings, 
a practice which dilutes the 
value of its stock. 

To keep its dividends up, 
and to prevent Diablo from 
turning the company’s finan¬ 
cial statements more bleak, 
PG&E has been making use 
of an accounting gimmick 
known as Allowance for 
Equity Funds Utilized Dur¬ 
ing Construction (AFDC), 
AFDC, Gibbons said, is a 
common accounting practice 
used by private utilities to 
charge their customers for 
risky investments that aren’t 
yet productive. This proce¬ 
dure has become more com¬ 
mon as nuclear plants absorb 
an increasing share of utility 
capital. 

What AFDC amounts to 
is a method for the company 


to list on its balance sheet mil¬ 
lions of dollars in income that 
exist only on paper. The idea 
is to pay this back later, when 
the plant in question has be¬ 
come profitable. 

Gibbons warned, however, 
that nuclear plant construc¬ 
tion has become such a lengthy 
and expensive process that 
the practice “is starting to get 
some companies into a whole 
lot of trouble,” 

So far, he said, PG&E has 
been able to absorb the defi¬ 
cits without much difficulty; 
if the plant is delayed much 
longer, however, it could spell 
serious economic problems. 

Meanwhile, a new study on 
the Diablo plant is casting 
more doubt on its safety, A 
report released in July 1982 
by Brookhaven National Lab¬ 
oratories, a Long Island, New 
York firm commissioned by 
the PUC to study earthquake 
support systems in one sec¬ 
tion of Diablo Unit One, ques¬ 
tions the accuracy of the ini¬ 
tial studies on which PG&E’s 
claims of seismic safety rest. 

Following the release of the 
Brookhaven report, PG&E 
agreed to “reverify" its seis¬ 
mic design at Diablo. How¬ 
ever, the company has no 
plans to make any structural 
repairs, Pruett told the 
Guardian, 

It’s not surprising, then, 
that PG&E is in such a rush 
to get Diablo operating — 
earthquakes or no earth¬ 
quakes, safe or not. If the 
plant doesn't run, the best the 
company can hope for is a 
long, expensive court battle. 
On the other hand, federal 
law limits the liability a utility 
can sustain in the event of a 
nuclear accident to $560 mil¬ 
lion. 

Many ratepayers are terri¬ 
fied by the prospect of a ques¬ 
tionably safe nuclear power 
plant operating near an earth¬ 
quake Fault, But the possibil¬ 
ity of having to pay for elec¬ 
tricity we will never use in or¬ 
der to keep Diablo cold is a 
bitter pill. PG&E hopes this 
will make a convincing argu¬ 
ment for opening Diablo — 
come hell or high water. 

Opposition to the plant, 
however, seems to be grow¬ 
ing — rate hikes or no rate 
hikes. If PG&E customers 
had been asked — if the cus¬ 
tomers had owned the utility 
— the Diablo fiasco might 
n ever h ave t aken p lace. ■ 


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THE BAY GUARDIAN VS. PG&E - THE 16 YEARS’ WAR 



A 'mini-feasibility' study by a group of CPAs 
concludes: 

San Francisco can 
buy PG&E’s system 
in the city 

and clear $21.9 
million a year 


BY PETER PETRAKIS 


Excerpls from an a rtio le published originally in \ he Gua rdian. February l A , 1973 

, acific Gas and Electric Company, in 
a Sept, 3rd mailing to its 30,000 San 
Francisco shareholders, charged that 
a feasibility study on municipaliza¬ 
tion would only show it is a “flagrant waste of 
taxpayers' monies/ 5 



The company, however, failed to disclose to its 
stockholders that the only study ever made of munici¬ 
palizing PG&E—prepared in 1972—predicted the city 
could profit by as much as $21 million dollars a year 
immediately on acquisition without raising rates. 

Peter Petrakis, in an article published by the Guard¬ 
ian on February 14, 1973, revealed the facts about 
municipalization PG&E does not want its share- 
holders—or the citizens of San Francisco—to know: 


in the spring of 1970, the 
Guardian and some citizen's 
groups formally asked the 
SF Public Utilities Commis¬ 
sion and the Supervisors to 
fund a detailed feasibility 
and engineering study on 
buying out PG&E. Both re¬ 


fused. 

Instead, they listened to 
Oral Moore, general man¬ 
ager of the city's Hetch 
Hetchy water and power 
facilities, who told them it 
would cost the city $200 mil¬ 
lion to buy out PG&E and 



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set up a municipal power 
system. And the PUC com¬ 
missioners and supervisors 
listened to PG&E lobbyists 
who contended this was 
much too costly and difficult 
for the city to do. 

However, Moore’s $200 
million estimate glossed over 
the most crucial point: once 
the city makes the initial in¬ 
vestments (through munici¬ 
pal revenue bonds) to pur¬ 
chase PG&E's system, the 
city will receive those mil¬ 
lions now going to PG&E 
and its major out-of-state 
stockholders. 

And city power revenues, 
according to an authoritative 
new study by an indepen¬ 
dent group of certified pub¬ 
lic accountants, will be 
enough to pay the annual 
operating costs of the sys¬ 
tem, the annual cost of re¬ 
tiring the bonds, with as 
much as $21.9 million left 
over each year for the city 
and the public to use. 

That $21.9 million could 


do the city a lot of good. It is 
$4.3 million more than the 
city's share of federal rev¬ 
enue sharing funds. It is 
more than the city makes 
from the “sewer tax,” which 
has practically doubled every 
resident’s water bill. It is S2 
million more than the prop¬ 
erty tax subsidy for Muni 
and five times greater than 
Muni’s current annual defi¬ 
cit. It is four times more 
than what PG&E pays the 
city in all taxes and franchise 
fees on its electric prop¬ 
erties. 

Municipal power distribu¬ 
tion would earn millions 
more for the city's Hetch 
Hetchy system than is cur* 
rently permitted by the col¬ 
lusive PG&E/Cky Hall ar¬ 
rangements that dump 
Hetch Hetchy power in un¬ 
profitable out-of-town mar¬ 
kets. 

Accountants for 
the Public 

The CPAs who made the 


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study are members of a 
foundation-funded, public 
interest accounting firm. Ac¬ 
countants for the Public, 
headquartered at 351 Cali¬ 
fornia Street, that is com¬ 
posed of 21 CPAs and edu¬ 
cators (from UC, SF State 
and USF) who work on pub¬ 
lic interest accounting proj¬ 
ects in their spare time. 

The firm, headed by Mor¬ 
ton Levy, a San Francisco 
CPA, did the financial re¬ 
search for the precedent-set- 
ting suit against three New 
Orleans hospitals for viola¬ 
ting the Hill-Burton Act and 
refusing to provide free 
medical care to the poor. It 
has also, among other 
things, done financial anal¬ 
ysis of the SF school district 


(on behalf of the PTA), Yer- 
ba Buena redevelopment (on 
behalf of SF Neighborhood 
Legal Assistance Foundation) 
and on PG&E’s latest appli¬ 
cation for a gas rate increase 
(on behalf of SF Consumer 
Action). 

In its public power study, 
prepared for the SF Neigh¬ 
borhood Legal Assistance 
Foundation and Citizens for 
Public Power, Accountants 
for the Public made a range 
of estimates of the costs to 
the city in buying either part 
or all of the existing PG&E 
system. 

It figured the costs and ex¬ 
pected revenues at six separ¬ 
ate levels of bonded indebted- 
continuedpage28 



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